25-Year Old Florida Man Charged With $10 Million Ponzi Scheme

In what is believed to be one of the youngest Americans charged with running a Ponzi scheme, Florida authorities have charged a Boca Raton man with orchestrating a Ponzi scheme that allegedly defrauded investors out of $10 million.  Donald R. French Jr. was recently arraigned on a charge of wire fraud after originally being detained in South Africa and deported to Las Vegas to face charges he passed $750,000 in bogus checks.  After entering a guilty plea to those charges, he arrived in Boca Raton last week. Charged with devising the scheme when he was just 21 years old, French now faces up to twenty years in federal prison for the wire fraud charge.

According to authorities, French incorporated D3 Capital Management LLC ("D3"), listing an office address in the ritzy Mizner Park area of Boca Raton, Florida.  Holding itself out as a 'premier provider of global investment management' with offices in Hong Kong and Rome, D3 promised investors lucrative annual returns of fifty percent or more through investments in commodities such as emeralds.  In total, D3 managed to amass over $10 million from over 20 investors.

However, as French later confessed to an FBI agent in July, the lucrative returns were nothing more than an elaborate Ponzi scheme that existed solely to support a lavish lifestyle.  This included living abroad in Rome for five years, frequent foreign travel, and extensive gambling losses.  Indeed, the Mizner Park address listed as the principal office address for D3 turned out to be nothing more than a phone number and an address.  According to that FBI agent, French attributed his ability to convince investors to part with their hard-earned money to his "gift of gab."   Rather than invest these funds, French accumulated more than $1 million in debit card purchases and withdrew more than $1 million in cash while using investor funds as his personal piggy bank.  

French was arrested in South Africa earlier this summer and subsequently deported to Las Vegas to face charges that he passed nearly $1 million in phony checks.  According to authorities, French was a frequent visitor in Las Vegas, where he accumulated exorbitant gambling debts that were satisfied using investor funds.  However, even after investor funds were depleted, French continued to frequent Las Vegas, where he racked up $600,000 in charges at popular casino The Cosmopolitan from April 2011 to June 2011.  Earlier this summer, French agreed to plead guilty to passing a bad check and accept a prison sentence of no more than 30 months.  

Now facing federal prosecution in Florida, French has claimed indigent status and enlisted the support of the Federal Public Defender's Office.  According to court records, French is scheduled to be arraigned on November 2, 2012.  

Authorities Charge Three With $28 Million Ponzi Scheme That Targeted Retirees

Authorities charged three men with operating a massive Ponzi scheme that targeted retirees and raked in nearly $30 million.  Robert C. Pribilski, 54, Mahmut Erhan Durmaz, 42, and John T. Burns III, 53, were each charged with multiple criminal fraud counts, with Pribilski and Durmaz each charged with five counts of wire fraud and four counts of mail fraud, and Burns charged with three counts of wire fraud and three counts of mail fraud.  Both wire fraud and mail fraud carry a maximum sentence of twenty years in prison, as well as criminal monetary penalties.  Additionally, the government is seeking $28 million in forfeiture from the three defendants.  While Pribilski and Burns are scheduled to be arraigned later this week, Durmaz fled the United States several years ago and is believed to be hiding in Turkey.

According to authorities, the three men were associated with USA Retirement Management Services ("USARMS"), which solicited retirees through mass-mailings to estate planning seminars held at country clubs and banquet halls.  The men portrayed themselves as educated and experienced in foreign investments that were specifically tailored to senior needs.  Investors were pitched "Turkish Eurobonds" through the purchase of USARMS promissory notes that yielded lucrative annual returns ranging from 8 to 11 percent.  Based on these representations, over 100 investors contributed more than $20 million to USARMS.

However, authorities allege that many of these representations were simply untrue.  For instance, USARMS did not actually invest these funds in Turkish Eurobonds.  Instead, investor funds were used to make over $7 million in Ponzi-style payments to existing investors under the guise of profits from successful trading.  Additionally, the men misappropriated nearly $5 million in investor funds to support a lavish lifestyle that included expensive cars, homes, vacations, and even pornography.  Durmaz even purchased a stamp collection and funded the purchase of the cyrogenic preservation of umbilical cord stem cells.  

Moreover, while investors were told that Durmaz had earned a Masters in Business Administration and was a Certified Senior Advisor, neither of these representations were true.  Finally, nearly $14 million was transferred to relatives and related companies in Turkey.  When the scheme was uncovered in 2010 by the Securities and Exchange Commission, only $900,000 remained in financial accounts controlled by USARMS. 

In addition to the newly-unveiled criminal charges, the SEC instituted a civil enforcement action against the three in 2010, seeking disgorgement of all ill-gotten gains and civil monetary penalties.  

A copy of the SEC's complaint is here.

Florida Man Suspected In Forex Ponzi Scheme Dead In Apparent Suicide

A Ft. Myers man suspected in a foreign currency Ponzi scheme that bilked investors out of nearly $1 million has been found dead in what authorities have preliminarily deemed a suicide.  Willaim Jeffrey Chandler, 55, was found dead early today inside a silver Mercedes parked in front of a Muvico Theaters in Palm Harbor, Florida.  A police spokeswoman disclosed that Chandler had "self-inflicted" wounds, but declined to elaborate further.  

Chandler was the subject of a civil enforcement action brought in September by the Commodity Futures Trading Commission ("CFTC").  According to the CFTC, Chandler had been soliciting individuals since at least July 2010 to contribute to a pooled account that purportedly engaged in trading off-exchange contracts in Chandler's account at a Swiss bank.  Participants were told that Chandler used to trade commodity futures when he previously worked at Merril Lynch, and lured by the prospect of guaranteed returns that ranged from two to 12.5 percent.  In total, Chandler collected nearly $1 million from investors.

However, not only had Chandler's account at the Swiss bank been closed since July 2011, but at the time the account was transferred to another foreign-exchange dealer, the account contained only $292.49.  Additionally, Chandler continued to solicit funds from prospective investors under the guise that he continued to trade in the closed Swiss account.  This was not disclosed to investors, who continued to receive consistent monthly returns.  However, Chandler began missing scheduled payments in early 2012, and when investors began demanding the return of their principal, they were met with a variety of excuses including his daughter's cancer recurrence, his wife's illness, and adverse tax consequences of transferring funds from Switzerland to the United States.  Indeed, according to the CFTC, Chandler is believed to have misappropriated the majority of investor funds. 

Following the filing of the enforcement action, the CFTC obtained an emergency order freezing Chandler's assets.  According to the Tampa Bay Times, and subsequently confirmed by Ponzitracker, at least one of Chandler's victims posted in local Craigslist sites seeking out any other investors who may have been scammed by Chandler, directing them to contact police.  Those posts, located here and here, appear to have been deleted.  

Chandler's alleged scheme was not his first run-in with authorities.  In 1991, he was charged with bank fraud and obtaining funds by false pretenses by the Department of Justice.  He was sentenced to ten months in federal prison.  

A copy of the CFTC's complaint is here.

California Woman Pleads Guilty to $2.2 Million Ponzi Scheme

A California woman admitted to masterminding a Ponzi scheme that bilked investors out of at least $2.2 million.  Celia Gallardo, 42, pled guilty to a single count of wire fraud stemming from her role in the scheme.  She was arrested earlier this year in July after a grand jury returned a sixteen-count indictment charging her with multiple counts of mail and wire fraud.  Gallardo faces up to twenty years in federal prison, as well as a fine of up to $250,000.  

According to authorities, Gallardo touted her real estate investment program to investors and promised above-average annual returns from Gallardo's purchase of condominiums.  From September 2007 to September 2008, dozens of investors contributed to the venture and received promissory notes from Gallardo memorializing thier investment.  However, rather than use investor funds for the stated purpose, Gallardo instead operated the classic Ponzi scheme, making Ponzi-style payments using funds from existing investors.  Additionally, Gallardo lived a lavish lifestyle, regularly taking expensive vacations and using ijnvestor funds to make mortgage payments.  In total, dozens of investors sustained losses exceeding $2 million.  

At her sentencing hearing, which has not yet been set, it is likely that Gallardo will be ordered to pay restitution to her defrauded victims.  

Authorities Make Second Arrest in $60 Million Silver Ponzi Scheme

Authorities arrested a second individual in connection with a $60 million Ponzi scheme that ranks as one of the largest in South Carolina’s history.  Wallace Howell, 60, was indicted and later taken into custody yesterday on the charge that he conspired to commit mail fraud in a $60 million Ponzi scheme masterminded by Ronnie Wilson that purported to profit off silver trading.  Wilson was arrested earlier this year, and pleaded guilty in July to two counts of mail fraud. 

Beginning in 2004, Howell is believed to have been involved with Wilson’s scheme as a promoter, touting the venture to investors as a lucrative opportunity.  Indeed, according to the Independent Mail, a South Carolina newspaper, many investors submitted questionnaires indicating that they became aware of the scheme through Howell.  However, likely unbeknownst to investors, Howell would later receive millions of dollars from Wilson as payback for the referrals.  This included nearly $3.5 million in “profits” realized by Wilson in trading for two investor accounts.  According to the indictment, Howell “instructed” Wilson to transfer those profits into his own account, which Howell later withdrew.  If true, the allegations would also likely constitute violations of federal securities laws if Howell was not licensed to offer or sell securities or investment advisory services in South Carolina. 

A receiver has since been appointed to recover funds for victim’s of Wilson’s scheme.  Wilson faces up to twenty years in prison when he is sentenced. 

The Receiver’s website is here.