Rothstein Ex-Associate Changes Plea, Will Plead Guilty

Just one week after another former colleague of convicted Ponzi schemer Scott Rothstein was convicted of fraud charges, another colleague filed court papers indicating he planned to enter a guilty plea to similar charges.  Douglas L. Bates, 54, had been scheduled to stand trial next week based on his role in Rothstein's $1.4 billion scheme.  

Bates was indicted along with former Rothstein associate Christina Kitterman back in August 2013.  The two were former attorneys at Rothstein's Ft Lauderdale law firm, Rothstein Rosenfeldt Adler ("RRA"), which at one point had over seventy attorneys and was a prominent South Florida law firm.  Both were accused of providing assistance to Rothstein as he purported to offer hefty returns to investors by brokering secret lawsuit settlements.  While Kitterman was accused of impersonating a Florida Bar official in a meeting with investors, authorities accused Bates of assisting Rothstein in inflating legal bills and signing a false letter.  

Both Kitterman and Bates maintained their innocence, and Kitterman was the first to stand trial.  In a controversial decision, Kitterman elected to call Scott Rothstein himself to the witness stand and also decided to testify in her own defense.  Both moves were widely questioned, with Rothstein providing testimony that incriminated Kitterman while the veracity of Kitterman's testimony was later questioned by the presiding judge who warned that a perjury charge was possible.

It is likely Bates' attorneys were regarding Kitterman's trial as a test case to gauge how Bates might later fare at his trial.  U.S. District Judge Donald Middlebrooks has scheduled a change-of-plea hearing for 10 a.m. Thursday, and prosecutors have filed a superseding indictment charging Bates with a single count of conspiracy to commit wire fraud.  The charge carries a maximum prison sentence of five years, and it remains to be seen whether the plea agreement will contain a lower recommendation.

North Carolina Men Charged For $2.3 Million Forex Ponzi Scheme

The Commodity Futures Trading Commission ("CFTC") charged two North Carolina man with operating a foreign exchange Ponzi scheme that raised at least $2.3 million from investors.  Ron Earl McCullough and David Christopher Mayhew, both of Raleigh, North Carolina, were charged with multiple violations of the Commodity Exchange Act.  The CFTC is seeking injunctive relief, disgorgement of all ill-gotten gains, restitution, civil monetary penalties, and the appointment of a receiver if necessary.  

According to the CFTC, McCullough and Mayhew began soliciting funds from investors to engage in purported foreign exchange trading.  For example, this included promises to a North Carolina couple that if they were to invest $300,000, the men would return $300,000 within 30 days and pay a trading profit of at least $400,000 in 60 days.  Promises were also made to other investors to return at least twice the amount of their investments.  In total, the men raised or solicited more than $2 million from investors.

Unsurprisingly, the promises of exponential short-term returns by the men were not the results of savvy trading, but rather what the CFTC alleged was a Ponzi scheme that used incoming investor funds to pay fictitious returns to investors.  According to the CFTC, the men suffered trading losses of hundreds of thousands of dollars.  Additionally, over $800,000 was misappropriated by the two men for personal expenses that included travel expenses, online forex trading courses, and even liposuction for Mayhew.  

The CFTC's complaint is below:

Enf Mccullough Complaint 021814

Indian Conglomerate Tata Warns Of Tata-Branded Ponzi Scheme

A massive Indian conglomerate that operates over 100 separate companies worldwide has issued a public warning to consumers that a British Virgin Islands company has been wrongfully using the "Tata" company name and soliciting investors for an alleged Ponzi scheme promising monthly returns of up to 100%.  Tata Group, which operates in over 80 countries and is perhaps best known for its Tata Motors automobile company, warned investors that a British Virgin Islands entity, Tata Agro Holding Ltd., had been touting its affiliation with the Indian conglomerate as it solicited investors.  Tata Group issued a strongly-worded denial disavowing any connection between it and Tata Agro, and indicated that it had taken unspecified action to prevent any further confusion.

According to Tata Group, the BVI entity had been soliciting investors on several platforms, including an online website at tataagro.com.  While the website is currently down, a cached version of the website is available here.  The company is alleged to solicited investments ranging from $5 to up to $10,000, promising daily returns ranging from 1.9% to 3.1% that increased commensurate with the size of the investment.  Tata Agro advertised itself as an agricultural investment company that claimed to be in the business of "assets (sic) management through wheat and corn futures trading on stock exchanges."  The company claimed it was a subsidiary of Tata Group, and represented that it had been engaged in the agricultural investment business since 2001.  

Investors were also encouraged to participate in the company's "referral program," which promised commissions for first, second, and third-level referrals attributable to the investor.  To convince investors of the legitimacy of the scheme, Tata Agro advertised that Amit N Dalal, who currently serves as the executive director of Tata Investment Corporation Ltd., was the President and CEO of Tata Agro.  

At this time, further information is not available concerning the potential number of investors or value of investments in Tata Agro or any criminal or regulatory action taken against the company.  

North Carolina Man Ordered To Pay $5.2 Million For $1.8 Million Ponzi Scheme

A federal judge ordered a North Carolina man to pay over $5 million in penalties and restitution for operating a commodities Ponzi scheme that took in nearly $2 million from investors.  Michael Anthony Jenkins and his company, Harbor Light Asset Management, LLC ("HLAM"), were ordered by U.S. District Judge James C. Fox to pay $1.3 million in restitution and $3.9 million in restitution for operating a commodities Ponzi scheme that solicited at least $1.8 million from nearly 400 investors.  Jenkins and HLAM were also permanently banned from commodities trading as well as enjoined from future violations of federal securities laws.  

Beginning in January 2011, Jenkins began soliciting investors for HLAM in person, in small groups, and by phone.  Jenkins told potential investors that HLAM was engaged in the business of investing in E-mini S&P 500 futures ("E-mini Futures"), and promised potential lucrative trading gains.  Investors were assured that their funds would be immediately wired to a specific trading account where they would be used to trade E-mini futures, and were provided with near-monthly account statements from Jenkins showing significant profits.  In total, Jenkins and HLAM raised at least $1.8 million from approximately 377 investors.

However, of the approximately $1.8 million raised, only $138,825 - less than 10% of the total - was transferred as promised to a specific account to trade E-mini futures.  This trading did not result in the hefty gains advertised in investors' monthly statements, but rather a total loss of approximately $3,500.  The remainder was diverted by Jenkins for a variety of unauthorized uses, including trading in gold and oil futures, cash withdrawals, payment of personal expenses, and payments of principal and purported trading profits to investors.  Additionally, of the payments made to investors, more than $400,000 was paid to certain investors in excess of their invested principal.  

Of note, Jenkins was the subject of discipline by the National Association of Securities Dealers in 1989, who barred him from associating with any of its members and imposed a $5,000 fine after Jenkins was found to have misappropriated a $5,000 customer check for his own personal use.   Additionally, while Jenkins had applied for registration with the CFTC as an associated person in April 2011, the application was subsequently withdrawn without Jenkins having obtained registration.

The order imposing relief is below:

Order by jmaglich1

Rothstein Colleague Found Guilty, Judge Hints At Perjury Charge

A Florida jury took just two hours to deliver a guilty verdict in the trial of a former attorney in convicted Ponzi schemer Scott Rothstein's now-defunct law firm.  Christina Kitterman, who attracted national headlines for her decision to call Rothstein to the stand in her defense, was found guilty of three counts of wire fraud after being accused of assisting Rothstein with his scheme by posing as a Florida Bar official during a meeting with investors.  Prosecutors have indicated they will likely seek a nine-year sentence, while Kitterman's attorneys are hoping for five years or less.  Interestingly, after allowing Kitterman to remain free on $250,000 bond, U.S. District Judge Daniel T. K. Hurley suggested that Kitterman may have committed perjury during her trial testimony.

Kitterman was indicted last summer, along with south Florida attorney Douglas Bates, on charges that she was a participant in Rothstein's scheme while employed as an attorney at his former firm, Rothstein Rosenfeldt Adler ("RRA").  There, according to authorities, Kitterman agreed to participate in a meeting with Rothstein investors posing as a Florida Bar official, telling investors that Rothstein's bank accounts had been frozen as the result of a pending bar association.  Kitterman was indicted on three counts of wire fraud.

Kitterman's attorneys successfully argued that Rothstein should be compelled to testify at her trial, and they may now question their decision after Rothstein testified for 1.5 days and generally was not observed to have bolstered Kitterman's defense.  In his testimony, Rothstein claimed that he and Kitterman had a "friends with benefits" relationship and that Kitterman was aware of her actions in assisting him.  

Judge Hurley allowed Kitterman to remain free on $250,000 bail until her sentencing, to which he cautioned Kitterman against failing to appear.  Prosecutors indicated that Kitterman will likely ask for a nine-year prison sentence for Kitterman, while her defense attorneys insisted a sentence below five years was appropriate.  However, Judge Hurley insinuated that Kitterman may have committed perjury during her trial testimony which, if true, could result in a sentencing enhancement or even perjury charges.

According to the Sun-Sentinel, sentencing is expected later this year.