Authorities Indict Two Men For 'Quick-Fix Scheme to Hide Assets' For Ponzi Scheme Suspect

Federal authorities indicted two Arizona brothers for their role in helping a South Carolina man implicated in a $60 million Ponzi scheme attempt to hide money from authorities.  Gordon and Benton Hall were charged with conspiracy to commit wire fraud, and are currently in route to South Carolina after being arrested in Arizona.  Authorities allege that the brothers agreed to provide monthly payments to Wallace Lindsey Howell, a South Carolina man charged in the $60 million silver bullion scheme masterminded by Ron Wilson, in exchange for hiding over $1.5 million in Howell's assets.  Wire fraud conspiracy carries a maximum prison sentence of twenty years, along with criminal fines of up to $250,000.

From 2001 to 2012, former Anderson County councilman Ron Wilson solicited investors for his company, Atlantic Bullion & Coin, Inc. ("ABC"), which purported to make healthy profits from trading in silver futures contracts.  Telling investors he would purchase silver bars that would be held in safe-keeping in a Delaware repository, Wilson raised approximately $90 million from 1,000 investors.  However, according to authorities, Wilson was not actually buying the quantity of silver he represented to investors, but rather was running a massive Ponzi scheme that bilked investors out of nearly $60 million.  After being arrested in April 2012, Wilson pled guilty in July and was later sentenced to serve 19 years in prison.  

However, Wilson was not alone in carrying out the scheme, and authorities later charged Wallace Howell with mail fraud conspiracy on the basis that he acted as a promoter for the scheme and touted it to investors as a lucrative opportunity.  Investors, however, were not told that Howell was paid handsomely for his efforts and received millions of dollars in commissions from Wilson.  Howell pled guilty earlier this year to wire fraud conspiracy.  

According to authorities, Howell contacted the Halls shortly after Wilson was arrested in an attempt to dispose of a portion of the illicit profits he had received from Wilson.  The men allegedly came to an agreement, in which the Halls agreed to pay Howell's legal bills and provide him a guaranteed monthly payment for life in exchange for at least $1.5 million Howell transferred to the pair that included real estate, a truck, 55 gold coins, and 1,000 ounces of silver.  The silver alone, based on a current market price of $28.50 per ounce, is worth nearly $300,000.  

A receiver has been appointed to gather assets for Wilson's victims, and any assets recovered from the Halls would likely go to the Receiver's efforts.  The receiver, Beattie Ashmore, has indicated that his investigation thus far "would paint a very dim picture" of a meaningful recovery of assets for distribution to victims.  

The Receiver's website is here.

2% Recovery Likely For Victims of $220 Million Ponzi Scheme

In a sobering reminder that Ponzi scheme victims rarely recover more than 5% of their losses, victims of a $220 million Ponzi scheme carried out by an Indiana couple learned that they can expect to recover less than 2% of their losses.  A court-appointed trustee overseeing the bankruptcy of Gary Wilder and his wife, Toni Jo Wilder, estimated that $5.2 million would be available for distribution to victims holding nearly $220 million in approved claims.  Both Gary and Toni Jo Wilder pled guilty to fraud and money laundering charges, and are currently serving prison sentences of 15 years and 7 years, respectively.  

The Wilders owned Wildwood Industries ("Wildwood"), which was based in Bloomington, Indiana, and once operated a thriving leaf and vacuum-bag manufacturing business.  Wildwood solicited investors to 'lend' funds that would be used to buy machinery, and in turn promised a healthy guaranteed annual return.  The company represented that it had healthy demand for its machines, obtaining numerous loans from creditors based on purported invoices.  In total, approximately 85 lenders loaned the company nearly $215 million.  

However, rather than manufacture leaf- and vacuum-bags, the Wilders masterminded an elaborate Ponzi scheme that caused devastating losses.  The severity of the scheme was aided by several Wildwood employees who admitted to playing a role in continuing the scheme, including one who altered serial numbers on existing machines to make it appear that new ones were being manufactured and another who approved invoices and documents that led to false financial statements.  In total, six people were convicted of various crimes related to their role in the fraud.  

Along with the lenders, also included in the victims were the nearly 700 employees who lost their jobs when Wildwood went out of business after news of the fraud broke.  Besides failing to make machines as promised, Wildwood also failed to contribute to employee 401(k) plans and various benefit plans including medical, dental and disability.  Following news of the fraud, Wildwood was placed into bankruptcy by its creditors, and was later sold for $2 million.

Gary Wilder pled guilty in July 2010 to one count of bank fraud and one count of money laundering, while his wife pled guilty to one count of conspiracy to commit money laundering.  

While creditors filed nearly $600 million in claims with the bankruptcy trustee overseeing the Wilders' personal bankruptcy, approximately $217 million in claims were approved.  A trustee is also overseeing the bankruptcy estate of Wildwood Industries, where asset recovery efforts remain ongoing nearly four years later.

New Jersey Man Receives 12-Year Sentence for $7.5 Million Mortgage Fraud Ponzi Scheme

A New Jersey man was sentenced to a 12-year term in state prison for a mortgage refinance Ponzi scheme that duped more than 40 victims out of more than $7 million.  Frederick Tropeano, 47, received the sentence from Monmouth County Superior Court Judge Ronald L. Reisner, who also ordered that Tropeano would be ineligible for parole until mid-2019.  Tropeano previously pled guilty in January to the equivalent of money laundering, which carries a maximum prison sentence of twenty years. In handing down the sentence, Judge Reisner made a downward departure from the 14-year sentence recommended by prosecutors as part of Tropeano's plea agreement.  

Tropeano, through his company Hawthorn Capital Corporation, solicited homeowners to refinance their existing mortgage at a much lower rate, with the understanding that proceeds from the new mortgage would be used to satisfy the original mortgage.  In total, Tropeano raised over $7 million from more than 40 homeowners who thought they were taking steps to reduce their mortgage payments.

However, according to authorities, Tropeano and his conspirators failed to use proceeds from the new mortgages to satisfy the homeowners' existing mortgages.  Instead, they operated the classic Ponzi scheme, using investor funds for unauthorized purposes that included paying personal expenses to support a lavish lifestyle.  Many homeowners were shocked to discovery that their existing mortgage had never been satisfied, often resulting in negative implications on their credit scores.  Additionally, several homeowners had their identity stolen by Tropeano and his associates, who in turn secured additional refinancings unbeknownst to the homeowners.  

Three of Tropeano's co-conspirators previously pled guilty to third-degree conspiracy charges, and are awaiting sentencing.  Tropeano was also ordered to pay nearly $7 million in restitution to his victims.

Indiana Man Receives 5-Year Prison Sentence For Role in $9 Million Ponzi Scheme

An Indiana man was sentenced to serve over five years in federal prison for his role in a Ponzi scheme that duped victims out of nearly $9 million.  Jerry Smith, 50, was sentenced to serve 65 months in federal prison after previously pleading guilty to one count of conspiracy to commit mail and wire fraud, one count of obstruction of justice, and one count of income tax evasion. The sentence comes after Smith's co-conspirator, Jason Snelling, was sentenced in late-2012 to a nearly-11 year prison term.

Snelling and Smith operated Dunhill Investment Advisers ("Dunhill") and CityFund Advisory ("CityFund") in downtown Cincinnati, where they guaranteed high rates of returns to clients under the guise that the firms were successfully engaging in day-trading.  Investors were promised annual rates of return ranging from ten to fifteen percent, with some investors receiving promises of even higher rates.  Investors were assured that their position would be liquidated to cash at the end of each trading day.  In total, the scheme raised nearly $9 million from seventy-two investors.  

However, the purported day-trading operation was nothing more than a Ponzi scheme in which Snelling and Smith misappropriated investor funds for a variety of unauthorized purposes.  This included making so-called interest payments to investors and supporting a lavish lifestyle that included the purchase of boats, jet skis, plastic surgery, and private school tuition. 

After authorities began looking into Dunhill and CityFund, Smith admitted to fabricating trading statements in an attempt to thwart the investigation.  Smith was also accused of tax evasion for failing to declare the stolen investor funds as income.

Along with his sentence, Smith was ordered to pay $5.4 million in restitution to victims, as well as over $72,000 in restitution to the IRS.  

Former Exorcist/Attorney/Bishop Sentenced to 11-Year Term for Role in $6 Million Ponzi Scheme

A former New York attorney who also claimed to be a trained exorcist and bishop was sentenced to 11 years for his role in a Ponzi scheme that duped investors out of over $6 million.  James Lagona received the sentence from United States District Judge William M. Skretny, who dismissed Lagona's claims that he was unaware of the fraud being perpetrated by the purported scheme mastermind, Guy Gane.  Lagona also made headlines late last year after he offered a "quid pro quo" bargain to prosecutor Wiliam J. Hochul's wife, who was then a candidate for Congress, offering to throw his support behind her in exchange for favorable treatment by her husband at his upcoming sentencing.  Hochul contacted the FBI, and Lagona was subsequently arrested.

Lagona was an employee at Gane's company, Watermark M-One Financial Services ("Watermark").  Potential investors were promised 10% annual returns from waterfront real estate investments, and were provided with 'debentures' evidencing their investment as proof.  However, Gane made no such investments, and instead used investor funds for a variety of unauthorized uses that included Ponzi-style payments to existing investors, personal and business expenses, and cash advances to his children.  

While Gane cut a deal with prosecutors, Lagona maintained his innocence and chose to stand trial with another co-defendant, Ian Gent.  The decision backfired, as Gane testified against the two and a federal jury convicted the men on conspiracy and money laundering charges in February 2011.  Gane was subsequently sentenced to a thirteen-year term in September 2011, and Gent received an eight-year sentence in late 2012. 

A bizarre interview featuring "Bishop" Lagona offering fortune-telling to live callers is available here. According to the bio provided by the site,

Bishop Lagona, an accomplished medium, healer and medical intuitive, has had psychic-mediumistic experiences since his early childhood. He is a Reiki Master/Teacher, and has studied psychism and mediumship, various healing modalities and energy work, crystals, dowsing, and tarot. Bishop Lagona consults with and advises various businesses and corporations on internal policies and concerns, hiring and personnel matters, stock market, Dow Jones Average and foreign currency exchange rate forecasts and predictions. He is available for your private and business consultations.

Not surprisingly, the emphasized claims were removed from 'Bishop' Lagona's bio on his personal website.