Former NFL Player Charged With Multi-Million Dollar Ponzi Scheme

For the second time in as many weeks, a former National Football League player faces charges for operating a multi-million dollar real estate Ponzi scheme.  Stu Voigt, 66, who previously played football for the Minnesota Vikings during the 1970s and played in three Super Bowls, was indicted on multiple criminal fraud charges along with Jeffery Gardner, 61, for the pair's involvement with Gardner's business, Hennessey Financial LLC.  Voigt and Gardner each face two counts of conspiracy to commit mail fraud, four counts of mail fraud, five counts of bank fraud, and seven counts of giving false statements on a loan application.  Gardner and Voigt were also charged with making monetary transactions in criminally-derived property.  If convicted of all charges, each of the men could face a maximum sentence of decades in prison.

According to authorities, Voigt and Gardner solicited investors for Hennessey Financial LLC, a company operated by Gardner that touted lucrative yet safe returns through investments in commercial real estate and similar projects.  In exchange for an investment, potential investors were promised potential annual returns ranging from 10% to 20%.  Voigt is accused of using his position as chairman of First Commercial Bank (the "Bank") in Bloomington, Minnesota, to secure loans for Gardner without disclosing Gardner's true financial position. Investors were told in 2008 that they could invest with a new corporation in exchange for abandoning their claims related to Hennessey, when in reality the new venture was nothing more than a bank account from which Gardner paid "interest" payments to investors.  In total, Gardner and Voigt raised millions of dollars from investors.  Gardner was previously indicted in February 2013 on multiple fraud charges.

The Federal Deposit Insurance Corporation ("FDIC") instituted proceedings involving the Bank in 2011, alleging that Voigt had committed misconduct by voting in favor of a loan and failing to disclose the extent of his involvement with borrower Hennessey and a guarantor identified as "Mr. X" who is believed to be Gardner.  The FDIC alleged that Voigt took actions as an officer of a Hennessey-related company to transfer the Bank's collateral for the loan out of the reach of the Bank, including the formation of a company to take a security interest in Mr. X's assets to the Bank's detriment.  These actions, alleged the FDIC, resulted in "substantial loss to the Bank and in gain to" Voigt.  Voigt, while denying wrongdoing, later agreed to a banking ban and a $15,000 fine.

Voigt is the second former NFL player to be charged for involvement in a Ponzi scheme in as many weeks.  Earlier this month, the Securities and Exchange Commission filed civil fraud charges against former Miami Dolphins player Will Allen, alleging that he and a business partner operated a $33 million Ponzi scheme touting extraordinary returns to investors through profitable loans extended to professional athletes.  

Facing Potential Clawback, Church Asks Members To Donate

A Michigan church that received approximately $300,000 in donations from a convicted Ponzi schemer has spurned a request by authorities to return the funds, instead announcing the creation of a fund that parishioners could donate to and which ultimately would be used to help the fraud victims.  Resurrection Life Church, located in Grandville, Michigan, received multiple donations and tithes from David McQueen, who is currently serving a 30-year sentence in federal prison after being convicted of operating a $46.5 million Ponzi scheme.  

McQueen promised investors monthly returns of 5% through his investment in a Florida company known as Maximum Return Transactions ("MRT").  MRT promised investors monthly returns ranging from 5% to 11% from trading in foreign currencies, with McQueen pocketing the difference between the 5% promised return and the actual return received from MRT.  McQueen's entity, Accelerated Income Group ("AIG"), also recruited insurance agents to sell the investment to their clients.  For a short period of time, this form of arbitrage was successful.

However, in mid-2007, MRT stopped making payouts to investors (and was later alleged to be a Ponzi scheme in a civil enforcement action filed by the Securities and Exchange Commission).  However, rather than notifying AIG's investors of the failure of MRT, McQueen continued soliciting investors with promises of the lucrative monthly returns.  In an attempt to reconstruct the returns from MRT, McQueen placed nearly 1/3 of investor funds in a variety of speculative investments that resulted in severe losses.  Despite these losses, investors continued to receive falsified account statements showing consistent account gains. The scheme later collapsed, as all Ponzi schemes do, and ultimately resulted in losses of $46 million to approximately 800 investors.

As part of his scheme, McQueen assumed a larger-than-life persona in his community that included outlandish displays of wealth coupled with a self-professed claim that he was "blessed to be a blessing" to sympathetic causes.  From 2005 to 2009, McQueen contributed approximately $300,000 to Resurrection Life Church through various tithes and donations.  However, those funds were not McQueen's personal funds, but rather were funds belonging to investors.  

After McQueen was ordered to pay $32 million in restitution to his defrauded victims, the U.S. Attorney's Office began contacting third parties who had received funds from McQueen seeking the voluntary return of those funds to be used to compensate victims.  One of those third parties that received such a request was Resurrection Life.  However, in a letter dated February 16, 2015, Resurrection Life secretary Bernard Blauwkamp informed the U.S. Attorney's Office that while it had "prayerfully considered your request," the Church would "respectfully decline" to return the $300,000.  A subsequent post on Facebook by Pastor Duane Vander Klok elaborated on the Church's position:

Regarding the recent request to voluntarily return the funds that were donated years ago by McQueen, we unfortunately do not have those funds. The money was dispersed to various charitable causes many years ago according to the requirements of the law. Because so much time has passed since the donations were made, it is impossible to find those dollars now. The orphanages, missionaries, even local businesses who actually received portions of that money have all long since put it to good use, and so have the businesses where they spent it and so on.

If Resurrection Life Church had been aware of the nature of the funds at the time they were received, or even before the funds were dispersed to charitable causes, we would have gladly returned them to the investors. Sadly, we never had that opportunity because no one had any knowledge of the illegal circumstances surrounding the gifts until many years later.

Any attempt to take our current donations and redirect them to the investors would create an ethical and potentially legal dilemma because, not only do we not have an equivalent sum available but, what we do have was donated recently and not for that purpose. Redirecting donated funds to a purpose other than what they were donated for is a very serious legal matter. We do not desire to be unethical, or commit a crime today, in reaction to the crime committed by someone else many years ago.

The Church also announced plans to create a fund to accept donations which would be used to compensate victims.  As Pastor Klok explained,

Since for both ethical and legal reasons we cannot simply redirect funds to the investors, we have been exploring what we can do for them. We are in the process of establishing a special fund account to benefit the investors who lost their funds. Our church community can donate to the account and all the monies received into that fund will be put towards the restoration of the investor’s loss. An independent attorney will oversee the escrow fund and will coordinate with the US Attorney for eventual distribution of all funds received to victims. Details of how to give to that account will be made available to our congregation through our website and social media as soon as they are finalized.

The U.S. Attorney's Office has not publicly commented on the Church's position.  While receivers have been successful in bringing similar suits around the country, here the lack of a receiver over McQueen's entities as well as the length of time that has elapsed since the donations took place back in 2005 - 2009 suggests it is unlikely that the church could face a clawback action seeking return of the donations.  It remains to be seen whether the Church's efforts to collect funds for victims will have any meaningful result, but those efforts will likely include the complex task of attempting to administer a claims process including hundreds of victims.  

The Church's February 16, 2015 Letter is below:

Resurrection Life Church Letter by jmaglich1

Son-In-Law Of New York Lawmaker Charged With $7 Million Ponzi Scheme

The son-in-law of New York lawmaker Sheldon Silver was indicted on charges that he operated a Ponzi scheme through his investment fund that duped investors out of at least $7 million.  Marcello Trebitsch, also known as Yair Trebitsch, was charged with a single count of securities fraud and a single count of wire fraud in a recently-unsealed complaint filed in the Southern District of New York.  Notably, Trebitsch's father-in-law, Sheldon Silver, was recently the subject of criminal corruption charges also filed in the Southern District of New York.  If convicted, Trebitsch could face up to twenty years in prison for each count.  

According to the complaint, which was filed under seal on April 10, 2015 by way of a sworn affidavit by a Federal Bureau of Investigation special agent, Trebitsch began soliciting investors in or around 2009 for Allese Capital, LLC ("Allese"), which Trebitsch touted as a successful investment fund that he operated with his wife.  Trebitsch, whose wife Michelle is a certified public accountant and is the daughter of former New York Assembly Speaker Sheldon Silver, told potential investors that Allese employed a successful trading strategy through the day-trading of large cap stocks that resulted in annual returns ranging from 14% to 16%.  Trebitsch assured investors that little to none of their funds would remain invested in the market overnight, and also claimed that he cleared his trades through a major Wall Street investment bank that also had agreed to invest $50 million in Allese.  In total, Trebitsch raised at least $7 million - a majority of which was raised from a single victim.

After Trebitsch's largest investor requested a partial redemption of his investment in June 2014, Trebitsch ultimately disclosed through his attorney that he had experienced significant trading losses and that, after accounting for Trebitsch's $400,000 "fee," no money remained.  

The Complaint alleged that a forensic review of Trebitsch's bank accounts demonstrated that only a small portion of investor funds were used to engage in trading, and that Trebitsch suffered net trading losses.  A subsequent search warrant executed at Trebitsch's house apparently turned up a handwritten note that appeared to be authored by Trebitsch and stating that he "reckognize [sic] the tremendous pain along with financial," followed by the crossed-out word, "pain."  

The Complaint is below:

US v Trebitsch

Atlanta Man Indicted For $1 Million Forex Ponzi Scheme

An Atlanta man faces multiple criminal fraud charges after being accused of raising more than $1 million from investors in a foreign exchange market Ponzi scheme.  Stafford S. Maxwell, 46, was indicted on ten counts of wire fraud stemming from his former ownership of Millennium Capital Exchange, Inc. ("Millennium")  Each count of wire fraud carries a maximum twenty-year prison sentence.  

According to authorities, Maxwell began soliciting potential investors back in 2008 through promises of guaranteed high returns ranging from 48% to 72% generated through Millennium's successful foreign exchange market trading through accounts in Geneva, Switzerland.  Potential investors were told that Maxwell was an experienced forex trader who had a long history of trading success, and that he had previously generated large returns for other investors.  Maxwell assured investors that he kept "reserve" funds in case of any trading losses, and claimed to use "stops" and "floors" on his currency trades to enhance his returns.  In total, Maxwell raised at least $1 million from investors.

However, the indictment alleges that Maxwell was not the savvy forex trader he held himself out to be.  Rather, Maxwell is accused of suffering significant trading losses using investor funds, including nearly all of the funds he invested in forex.  Maxwell also allegedly lacked the reserve fund he claimed to have, and later ran out of money to pay investors their "guaranteed" returns.  According to authorities, Maxwell lost or spent almost every dollar invested with him.

SEC Busts $33 Million Ponzi Scheme Touting Pro Athlete Loans

The Securities and Exchange Commission filed an emergency enforcement action alleging that a Massachusetts company has raised nearly $32 million from dozens of investors under the guise of providing lucrative loans to high-profile athletes during the "off-season."  Capital Financial Partners, LLC, Capital Financial Holdings, LLC, and Capital Financial Partners Enterprises, LLC (collectively, "Capital Financial"), along with principals William D. Allen and Susan C. Daub, were named in a complaint filed by the Commission accusing them of violations of multiple federal securities laws.  The action was unsealed earlier today after the Commission obtained a Temporary Restraining Order that included an asset freeze and other equitable relief.  The Commission is seeking injunctive relief, disgorgement of ill-gotten gains, prejudgment interest, and civil monetary penalties.

According to the Complaint, which is embedded below, William Allen - a former NFL player himself - and Susan Daub began soliciting investors in 2012 to participate in some or all of a short-term loan to a professional athlete who might not have access to guaranteed salary money during that particular athlete's "off-season."  As Capital Financial's website explained,

In many cases, athletes' contracts do not allow them to access their guaranteed money during the off season or early in the season when they may need a significant sum to purchase a house or car, pay the bills, or meet a financial demand. By pooling the resources of a network of investors, CFP gives athletes access to money when they need it while providing investors with solid, short-term returns on investment.

Potential investors were told that Capital Financial required a minimum $75,000 investment, of which a 3% origination fee would be subtracted, and that a typical athlete loan was for $600,000.  Before making an investment, a potential investor was often provided with information about a particular athlete, including that athlete's sports contract and what amounts of that contract were guaranteed.  According to the Commission, at least some potential investors were led to believe that their investment was backed by that particular athlete's contract and that Capital Financial had the ability to receive payments from that athlete's team if needed.  In return, an investor was promised monthly interest rates ranging from 9% to over 18% depending on the duration of the loan.  In total, Capital Financial raised at least $31.7 million from over 40 investors from July 2012 to February 2015.

However, according to the Commission, nearly half of the money raised from investors never made it into the pockets of a particular professional athlete.  For example, over two dozen investors contributed more than $4 million in mid-2014 with the understanding that they were participating in a $5.65 million loan to an unnamed National Hockey League player.  Yet, the Commission alleged that the $5.65 million promissory note was never signed, and the particular NHL player subsequently filed for bankruptcy in October 2014.  While Capital Financial filed a proof of claim in the player's bankruptcy case claiming a $3.4 million debt, none of the investors were informed of the bankruptcy and continued to receive monthly payments amidst assurances that the loan was "performing as expected".  The Complaint also alleges similar misrepresentations with respect to purported loans made to MLB and NFL players.

The Complaint details that, from July 2012 to February 2015, Capital Financial received roughly $13 million in loan repayments from athletes yet paid out approximately $20 million to investors - a scenario in which the Commission alleged that the additional $7 million paid out to investors came from new investors in a classic Ponzi scheme.  Allen and Daub are also accused of withdrawing more than $7 million for various personal and unrelated business expenses, including casino and travel expenses as well as loans to various insurance companies.

While it is unknown when Capital Financial appeared on the Commission's radar, it appears that the unnamed NHL player in the Commission's complaint was veteran NHL player Jack Johnson, whose high-profile October 2014 bankruptcy filing disclosed at least $15 million in undisclosed loans taken out by his parents - loans that the Columbus Dispatch characterized as "nonconventional" high-interest loans.  Given the significant media coverage of Johnson's bankruptcy and allegations that some of the loans were fraudulently obtained by his parents, it is certainly plausible that authorities may have discovered the fraud after closely scrutinizing Capital Financial's creditor status. (UPDATE: The Palm Beach Post has a story that seemingly confirms this connection, recounting deposition testimony from a lawsuit Allen had filed against Johnson).

A copy of the Complaint is below:

Cfp Complaint