"Habitual Fraudster" Gets 9-Year Sentence For $9.2 Million Ponzi Scheme

A Colorado man dubbed a "habitual fraudster" by the Securities and Exchange Commission learned he will spend the next nine years in prison for masterminding a $9.2 million Ponzi scheme.  Larry Michael Parrish, aka Michael Parrish, received the sentence after previously pleading guilty to a single count of wire fraud last May.  In addition to the prison sentence, Parrish was also ordered to pay $4 million in restitution to his defrauded victims.

Parrish operated IV Capital Ltd. ("IV Capital") from November 2005 to October 2009.  Parrish held out IV Capital as an investment and trading company, telling potential victims that the company had more than $20 million under management, guaranteed monthly profits of at least 2.5%, and that professional third parties would evaluate the company's accounts.  Based on these and other representations, Parrish and IV Capital raised more than $9.2 million from investors.

However, of the funds raised, less than $3 million were actually used for trading by Parrish.  Contrary to the consistent track record painted by Parrish, nearly all of those funds were lost in risky trading.  More than $5 million was used to make "profit" payments to investors, with the remainder being used by Parrish for a plethora of unauthorized personal expenses that included luxury vacations, entertainment and travel, golf outings, and a Harley Davidson motorcycle.  

Of note, Parrish had previously been the subject of an enforcement action by the Securities and Exchange Commission in which he was subject to a bar order prohibiting him from future violations of securities laws.  Some investors even found out about this after an internet search, but were convinced by Parrish that he was not the same Larry Michael Parrish named in the previous action.  

No Prison Term For Michigan Man That Helped Ponzi Schemer Launder Money

A Michigan man learned that he will not serve any jail time in connection with allegations he used his family dining restaurant to launder money in connection with a $9 million Ponzi scheme.  Douglas Edward Kacos, 58, instead received a sentence of three years of probation and fifty hours of community service.  Kacos could have received up to two years in prison after earlier pleading no contest to fourth-degree money laundering charges.  The masterminds of the scheme, Jeffrey Ripley and Danny Lee VanLiere, previously received sentences of six-to-twenty years in prison.  

Beginning in July 2006 and continuing up until January 2012, Ripley and VanLiere solicited investors for their company, API Worldwide Holdings ("API").  The pair solicited mainly elderly investors, convincing them to cash in certificates of deposit ("CDs") and other investments they owned, and once those investments matured, pressuring them to invest the proceeds in API.  The pair raised more than $9,000,000 from investors, and were later arrested in March 2012 and charged with operating a Ponzi scheme.

Kacos and another man, Thomas Doctor, began assisting Ripley with collecting funds from investors, despite authorities' allegations that the men were aware of Ripley's previous run-ins with regulators over the sale of unregistered securities.  Kacos, who operated the New Beginnings Restaurant in Grand Rapids, Michigan, began acting as a registered agent for API and opening financial accounts to receive funds from API investors.  Once these funds were received, Kacos then wired those funds to foreign destinations, including Africa and the United Kingdom, to allow Ripley to avoid detection by regulatory or law enforcement.  

Kacos and Doctor were arrested in October 2013, and maintained they were unaware of the criminal nature of their actions.

Boston Ponzi Family Sentenced to Prison for $10 Million Ponzi Scheme

A Boston husband, wife, and son received prison sentences after pleading guilty to charges they operated a $10 million Ponzi scheme that defrauded dozens of friends and neighbors. Steven Palladino, his wife Lori, and son Gregory, entered guilty pleas before Suffolk Superior Court Judge Janet Sanders on Tuesday.  Judge Sanders sentenced Steven Palladino to serve ten years in state prison, while sentencing his son, Gregory, to a two-year sentence to be served in jail.  Lori Palladino was given a two-year sentence that was subsequently suspended for a five year period.  All three were ordered to pay restitution to victims.  Their company, Viking Financial Group ("Viking"), also pleaded guilty and was sentenced to five years of probation and ordered to pay restitution.

The Palladinos were the sole principals of Viking, which advertised itself to investors as a high-yield, low-risk investment strategy carrying above-average returns by making secured loans to borrowers at high interest rates.  These purportedly profitable loans allowed Viking to pay an above-average return to investors while still pocketing the difference for a healthy profit.  Based on these representations, Viking took in more than $10 million from at least 40 victims.  

However, in reality Viking made very few loans, and of these loans, many were made in violation of a state statute prohibiting loan interest rates exceeding 20%.  Indeed, three of the loans extended in 2007 and 2008 carried interest rates exceeding 60% - which would later serve as the basis for three usury charges against Steven Palladino.  The majority of investor funds served only to support a lavish lifestyle for the Palladinos that included Bahamas trips, rent for Steven Palladino's mistress, and hundreds of thousands of dollars in gambling losses.  Additionally, nearly $400,000 in investor funds were used to satisfy a condition of Steven Palladino's probation stemming from a 2007 conviction for, ironically enough, defrauding an elderly relative.  

The family was indicted back in September on charges that they carried out one of the largest investment scams in Boston since Charles Ponzi's infamous scheme nearly 100 years ago. Each of the three was charged with one count of larceny over $250 and larceny over $250 from a person over 60.  The three were also charged with conspiracy to commit larceny, with Gregory Palladino facing an additional three counts of usury and one count of tampering with evidence. 

Steven Palladino also faced loan-sharking charges after prosecutors accused him of seeking out an investor for repayment of a Viking-made loan.  

Previous Ponzitracker coverage is here.

Las Vegas Man Gets 10-Year Sentence For $1.3 Million Ponzi Scheme

A Las Vegas man was sentenced to serve ten years in prison after pleading guilty to operating a $1.3 million Ponzi scheme.  Hans Seibt, 72, received the maximum sentence from District Court Judge Kathleen Delaney after pleading guilty to a single felony theft charge.  In addition to the prison sentence, Seibt was also ordered to pay $1.3 million in restitution to victims.

Seibt purported to be a successful real estate developer, operating several businesses including HSLV Development Corporation, Clark and Nye County Development Corporation and SWN Land Corporation.  Beginning in 2007, Seibt solicited money from investors based on purported deals that were secured by parcels of land in Nye County, Nevada.  In return, investors were promised annual returns ranging from 10% to 12%.  In total, Seibt raised more than $1.3 million.

However, Seibt and several of his companies filed for bankruptcy protection in September 2008 in the middle of the real estate downturn, citing collective debts exceeding $70 million.  The Securities Division of the Nevada Secretary of State began investigating Seibt, and he was arrested in July 2011.  The bankruptcy trustee appointed to Seibt's case has been unable to recover any funds to distribute to victims.

Because Seibt was prosecuted by state authorities, he will be eligible for parole in approximately 4 years. 

After Allegedly Fleeing to Colombia and Faking Car Accident, Naval Academy Grad Charged in $1.2 Million Ponzi Scheme

After a bizarre series of events that included allegedly faking a serious car accident and assuming the identity of two female sales assistants, a New York Naval Academy graduate was indicted on charges he masterminded a Ponzi scheme that swindled friends and former classmates out of at least $1.2 million.  Bryan Caisse, 50, was charged by New York criminal authorities on four counts of Grand Larceny in the Second Degree, six counts of Grand Larceny in the Third Degree, and one count of Scheme to Defraud in the First Degree.  Caisse, who fled to Colombia back in October 2013 after authorities executed a search warrant on his apartment, was arrested in Bogota this past weekend and returned to the United States.  

According to authorities, Caisse began soliciting family and former classmates in April 2008, telling them he was starting a hedge fund, Huxley Capital Management, and was seeking so-called working capital loans to cover short-term expenses until larger investors filled that void.  These were short-term loans ranging from one to two years, and promised annual rates of return of 8%.  Investors were drawn to Caisse as a result of his history as a former bond salesman and trader with now-defunct Bear Stearns.  In total, Caisse raised approximately $1.2 million from at least 20 family members and former classmates.  

However, Caisse's promises of forthcoming deep-pocketed investors soon fell through.  After the New York District Attorney’s Major Economic Crimes unit conducted an investigation, authorities alleged that instead of using the money to pay hedge fund expenses, Caisse spent investor funds on a variety of personal expenses that included rent, car services, tuition for his daughter's private school, and even $10,000 on a dating service.  

Investors that attempted to recoup their investment from Caisse encountered a variety of setbacks in their quest.  This included:

• Claims that Caisse's bank, HSBC, could not wire funds except to another HSBC account;
• Communications with Caisse's assistant, Kristy Smith, who would not speak on the phone because of her poor English;
• Communications with another assistant, Christine Woo, who also refused to speak on the phone and eventually stopped communicating;
• Representations to investors that Caisse had been in a horrific car accident that caused him brain damage and a broken hip; and
• Numerous checks being lost in the mail.

A New York judge set Caisse's bail at $3 million.

For an extremely in-depth look into Caisse's story, see the Southern Investigative Reporting Foundation's article here.