Couple Sentenced to Prison for Fraudulent Loan Ponzi Scheme

An Ohio couple was sentenced to prison for operating a stock-based loan scheme that defrauded investors out of nearly $20 million.  Michael Spillan, 44, and Melissa Spillan, 41, received sentences of 140 months and 36 months, respectively, in federal prison, to be followed by several years of supervised release.  The Spillans had previously pled guilty to one count of conspiracy to commit securities fraud, mail fraud and wire fraud.  Michael Spillan also pled guilty to one count of securities fraud, one count of wire fraud, and one count of mail fraud.  

The Spillans operated several companies, including One Equity Corporation, Triangle Equities Group, Inc., Victory Management Group, Inc., and Dafcan Finance, Inc.  From 2003 to 2008, investors were solicited to transfer shares of stock to the Spillans as collateral for low-interest loans.  Investors were promised the return of their shares upon repayment of the loans.  Instead, the Spillans sold the shares, using the proceeds for personal expenses and to fund loans to new investors.  In total, over $25 million was swindled from approximately 50 investors.  

The Spillans were also ordered to pay restitution for the full amount of investor losses.  Michael Spillan has several past convictions for offenses including bank fraud, forgery, theft, passing bad checks and safecracking. 

Man Sentenced to Fifteen Years in Prison for Operating Ponzi Scheme With Two Children

A federal judge sentenced a man to fifteen years in prison for his role in a Ponzi scheme that swindled investors out of nearly $11 million.  Roy Fluker, Jr., 56, received the sentence after his son and daughter each received eight-year prison sentences for their role in the scheme.  Along with the prison sentence, Fluker and his children were ordered to forfeit $9 million to authorities and to pay restitution of $7,336,957 to defrauded investors.  

From 2005 to 2008, Fluker operated More Than Enough LLC and Locust International LLC, which took in nearly $20 million from mainly African-American investors.  Potential investors were offered the ability to earn twenty-five percent monthly returns, resulting in a yearly profit exceeding two hundred percent of the original investment.  Investors were also given the option to invest in a "Housing Program" that promised to reduce mortgage payments and allow outright home ownership in five years.  Instead, investor funds were used for personal expenses and to make interest payments to existing investors, and losses totaled $10 million when the scheme collapsed in 2006.  

The Illinois Attorney General's office has thus far recovered over $3 million for victims of Fluker's scheme. 

Attorney Sentenced to Five Years for Role in Ponzi Scheme

A Fort Lauderdale attorney was sentenced to five years in federal prison for his role in a giant Ponzi scheme that defrauded thousands of investors out of nearly $1 billion.  United States District Judge Adalberto Jordan sentenced Michael J. McNerney, 63, to the maximum sentence possible for wire fraud.  McNerney was the former lead attorney for Mutual Benefits Corp., a viatical settlement broker shut down by the SEC in 2004 and accused of operating a giant Ponzi scheme.

Mutual Benefits solicited investors to purchase viatical settlements and life insurance policies, pitching guaranteed returns on policies purchased by elderly and terminally ill individuals.  From 1994 to 2004, more than $1.25 billion was raised from 30,000 investors.  Prosecutors indicted McNerney in December 2008 on twenty-five counts in association with his role as outside counsel for Mutual Benefits.  The indictment was later dropped when McNerney pled guilty to a single count of conspiracy to commit mail and wire fraud and agreed to aid authorities in their investigation against other Mutual Benefits executives.  In his role as outside counsel, McNerney acknowledged concealing from regulators the involvement of one executive's criminal past that included a fraud conviction.  McNerney also failed to stop the company from making false representations concerning the company's prowess at estimating life expectancies.  

McNerney is the tenth individual to be convicted for a role in the scheme.  Along with the sentence, he was also ordered to pay $826 million in restitution to victims at a rate of 10% of future income.  Three top executives have pled not guilty and are currently scheduled to stand trial in 2013.

House-Flipping Ponzi Schemer Sentenced to Ten Years

A California man was sentenced to ten years in state prison for orchestrating a house-flipping Ponzi scheme that cost investors nearly $1 million.  William Warren Baker, 59, received the maximum allowable sentence after previously pleading guilty to thirteen felony counts of using untrue statements in the purchase or sale of securities and one felony count of grand theft.  

According to authorities, Baker solicited funds from at least ten investors who thought that Baker would purchase, fix up, and sell distressed real estate for a profit.  The scheme took place from January 2006 to May 2008, during which Baker took in over $900,000 from investors.  Yet instead of purchasing homes, Baker instead used investor funds to pay personal expenses or to satisfy redemption requests from older investors.  Baker also purchased property for personal use and transferred it to his wife and son through use of a trust. Authorities uncovered the scheme while investigating the disappearance of Baker's mother, and later charged Baker with stealing more than $6,000 in social security payments intended for her.  

In addition to the sentence, Baker was ordered to pay $1.8 million in state fines and $900,000 in restitution to victims of the scheme.

Madoff Trustee Files Five More Clawback Lawsuits Against Feeder Fund Investors Seeking Nearly $100 Million

The court-appointed trustee of Bernard Madoff's gigantic Ponzi scheme continued his quest to recover funds from investors in Madoff's largest feeder fund, filing five more lawsuits seeking over $95 million for defrauded investors. Irving Picard, the court-appointed trustee, filed the suits in the wake of a settlement with Fairfield Sentry, Madoff's largest 'feeder fund,' that allows him to "claw back" profits from investors who placed funds with Madoff through Fairfield. The latest lawsuits come on the heels of seven lawsuits filed last week seeking the return of at least $173 million.  Picard has now filed suits seeking nearly $470 million from Fairfield customers.

According to the complaints, a total of $3 billion was transferred from Madoff to Fairfield during the six-year period preceding BLMIS' bankruptcy filing.  Picard seeks to avoid the transfers - known as subsequent transfers - to each defendant from Fairfield Sentry under the powers granted under Sections 550 and 551 of the Bankruptcy Code.  The latest wave of lawsuits include the following defendants and amount sought:

• National Bank of Kuwait - $18,724,399 
• DEZ Financial Management Ltd. - $14,776,114
• Maple Key Market Neutral Cayman Islands LP - $14,509,369
• Unifortune Asset Management Sgr Spa and Unifortune Conservative Fund - $26,772,978
• Delta National Bank and Trust Company - $20,634,958 

Filing the lawsuits on behalf of Picard are Baker & Hostetler attorneys David J. Sheehan, Mark A. Kornfeld, Deborah A. Kaplan, Michelle R. Kaplan and Torello H. Calvani.

Each of the complaints may be found here.