New Hampshire Woman Sentenced to Four Years For $1 Million Ponzi Scheme

A former lobbyist who was found guilty of bilking investors out of nearly $1 million has been sentenced to nearly four years in federal prison.  Joan R. Laplante, 66, received a forty-six month sentence after previously being convicted of mail fraud at a five-day jury trial earlier this year.  LaPlante was the former director of the New Hampshire chapter of the National Federation of Independent Business, the leading small business association representing small and independent businesses.  

Beginning in 1996, LaPlante owned and operated JRL Business Resources LLC ("JRL").  JRL was in the factoring business, which involved the purchase of a business's receivables at a discount that provided immediate capital to the business.  However, JRL ceased legitimate business activities by 2002, and instead solicited potential investors by promising annual returns ranging from twelve to eighteen percent.  In total, over $2 million was given to LaPlante and JRL, and investors received fictitious monthly statements showing that their accounts were experiencing constant gains. Instead,  LaPlante used new investor funds to make interest payments to existing investors, resulting in total losses that authorities estimated at $880,000.

LaPlante had faced up to twenty years in prison.

Opening Arguments Scheduled to Begin Tomorrow in Rothstein Victim Lawsuit

The delayed trial of an investment group seeking damages from a South Florida bank for its alleged role in facilitating Scott Rothstein's massive multi-billion dollar Ponzi scheme is scheduled to begin tomorrow.  Originally set to start October 24th, United States District Judge Marcia Cooke postponed the suit while the parties attempted to settle through mediation.  As expected, the parties were unable to amicably resolve the dispute.  

The suit is an attempt of Coquina Investments, a Texas-based investment partnership, to recover damages from TD Bank stemming from the actions of several employees that allegedly covered up Rothstein's crimes or otherwise aided his efforts.  The South Florida Business Journal reports that TD Bank's attorneys recently filed several motions to exclude several pieces of supposedly-prejudicial evidence.  These motions, known as motions in limine, seek to exclude the mention of criminal charges against Rothstein or his co-conspirators, the mention of bribes or improper payments by Rothstein to TD Bank employees, Rothstein's wire transfers to Morocco immediately prior to his arrest in 2009, and information about other investors related to Coquina.  

The suit is seeking compensatory and punitive damages against TD Bank, along with Coquina's costs and fees incurred in prosecuting the action.  Judge Cooke previously granted the dismissal of racketeering claims brought by Coquina, holding that Coquina had failed to allege a pattern of racketeering activity.

A copy of Coquina's complaint against TD Bank is here.

Philadelphia Lawyer Charged With $8.5 Million Ponzi Scheme

Authorities filed new charges against a New Jersey lawyer accused of operating a Ponzi scheme that took in more than $8 million from its victims.  In an amended complaint, the New Jersey Office of the Attorney General alleged that Michael W. Kwasnik, 42, along with several other individuals, defrauded dozens of investors out of millions of dollars through the sale of allegedly risk-free three-year notes.  In addition to civil penalties, the suit is also seeking the imposition of restitution for the benefit of defrauded investors.  

According to the complaint, Kwasnik, the former managing partner of Kwasnik, Rodio, Kanowitz & Buckley P.C. ("KRKB"), also served as counsel to Liberty State Financial Holdings Corp. (LSFHC") and its subsidiary Liberty State Benefits of Pennsylvania, Inc. ("LSBPA").  Through LSFHC and LSBPA, Kwasnik solicited potential investors to purchase unregistered three year notes (the "Notes") that paid an annual return of twelve percent.  Some investors were told that the funds raised from the Notes would be used to purchase life insurance policies and beneficial interests in Irrevocable Life Insurance Trusts in the life settlement market.  However, instead of making legitimate investments, the suit alleges that Kwasnik operated a typical Ponzi scheme that used new investor funds to make interest and principal payments to existing investors.  In addition, Kwasnik is said to have diverted over $5 million to himself and other family members and defendants.  The New Jersey Bureau of Securities (the "Bureau") also alleged that neither the defendant companies nor the Notes were registered with the Bureau.

In a separate proceeding, an indictment unsealed today made separate allegations that Kwasnik diverted more than $1 million from a former client.  In the indictment, Kwasnik was charged with theft by failure to make required disposition of property received, misapplication of entrusted property, theft by unlawful taking, and financial facilitation of criminal activity.  A warrant has been issued for Kwasnik's arrest.

A copy of the amended civil complaint is here.

A copy of the indictment is here.

Liquid Capital Founder Pleads Not Guilty in $6 Million Ponzi Scheme

A former hedge-fund manager who once appeared on CNBC pled not guilty to charged he ran a $6 million Ponzi scheme.  Brian Kim, 36, was originally indicted in 2009, but fled the United States using a fraudulently obtained passport before his trial was to begin.  He was apprehended and returned to the U.S. in October, and faced new charges related to his attempt to flee.  

Beginning in at least 2008, Kim operated Liquid Capital Management, LLC ("Liquid Capital"), which purported to trade commodity futures.  Kim solicited potential investors by representing that his commodity pool had generated returns exceeding 240% since inception.  Perhaps adding legitimacy and exposure to Liquid Capital, Kim twice appeared on financial network CNBC in 2009 as a guest commentator on derivatives trading.  In total, nearly 40 investors entrusted over $2 million to Liquid Capital.  However, authorities allege that Kim invested roughly thirty percent of investor funds in commodity futures, and lost nearly all of that amount.  The remainder was used to pay fictitious returns to existing investors and to sustain an expensive lifestyle that included shopping trips in New York and excursions to Atlantic City.  Additionally, Kim is also accused of falsifying documents to allow him access to funds controlled by his homeowner's association, from which he transferred nearly $500,000 for use in his scheme.  

The Commodity Futures Trading Commission also brought charges against Kim in February 2011, charging him with violations of the Commodity Exchange Act and seeking relief including permanent injunctions and disgorgement of ill-gotten gains.

A copy of the indictment is here.

Six-Year Sentence for Indiana man who Operated $1.4 Million Ponzi Scheme

An Indiana man was sentenced to six years in state prison for defrauding investors out of $1.4 million in a Ponzi scheme.  Randell E. Morrison, 55, also received two years of probation following the completion of his sentence, with the first year to be served under house arrest.  Allen Superior Judge John Surbeck scoffed at Morrison's request to avoid prison to instead pursue a "business opportunity" that would purportedly allow him to make full restitution to investors in seven years, stating that “[w]e are our fooling ourselves to think we should put you on the streets to run another scheme to make restitution.”

Morrison was originally charged with seven counts of securities fraud and one count of corrupt business influence stemming from his sale of unregistered securities to investors.  From September 2005 to August 2010, his company, Research & Development Management LP. ("R&D Management"), solicited victims to entrust their retirement assets and promised them a thirty percent annual return in exchange.  Morrison refused to provide statements to victims for the duration of the scheme, only telling investors that they were "making money."  In reality, Morrison used victim funds for business and personal expenses and failed to make investments as he promised.  

A subsequent investigation by the Indiana Securities Division found that Morrison had failed to register R&D Management as a broker-dealer.  He was apparently sued back in 2007 by an investor who sought the return of their investments, but the suit was dismissed when Morrison promised to repay the investors.  When he fell behind on the repayment, the suit was re-filed.