Wednesday, September 16, 2009

Ponzi scheme in USA

September 15, 2009
Folsom Ponzi Scheme Operator Sentenced to Nearly 20 Years in Prison
United States Attorney Lawrence G. Brown announced today that STEFAN A. WILSON, aka Stephen K. Wilson, 45, of Folsom, was sentenced today by United States District Judge Lawrence K. Karlton to 236 months in prison, three years of supervised release, and ordered to pay restitution of over $12 million for running a Ponzi scheme that financially devastated approximately 80 victims and their families. On March 17, 2009, the defendant pleaded guilty to wire fraud and filing a false income tax return. A federal grand jury indicted WILSON on March 13, 2008.
This case was the product of an extensive investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation.
According to Assistant United States Attorneys R. Steven Lapham and Russell L. Carlberg, who prosecuted the case, from 2006 through 2008, WILSON solicited money from investors with the promise of an 18–24 percent return on their money. Most of these individuals were not wealthy and could not come up with the $100,000 minimum investment required to invest in the “Christians in Crisis” (CIC) Investment Fund. Knowing this, the defendant encouraged these people to refinance their homes, draw upon their life savings, or dip into a 401(k). As a result, many of the victims have lost their home or have been forced to come out of retirement. Others who are in their later years now see no prospect of retirement because their life savings has been completely wiped out. There are collateral victims too as college funds and inheritances have been wiped out.
“The defendant’s conduct was beyond reprehensible. He manipulated innocent investors and destroyed lives. The only thing Stefan Wilson actually earned in this scheme was the almost 20 years in federal prison the court imposed,” stated U.S. Attorney Brown.
To lure prospective investors, WILSON and others acting at WILSON’s direction, represented to investors that his CIC Investment Fund was extremely profitable, and the return on investment was more than sufficient to pay the promised rates of return. WILSON also told investors that he had a reserve fund that would continue to pay investors the promised return even if the fund sustained losses.
In fact, the CIC Investment Fund did very poorly. Between February 2006 and February 2008, WILSON collected approximately $13 million from investors. He placed approximately $6.5 million of these funds into a brokerage account, which he used to buy and sell stock. Virtually all of that money was lost, and by July 2007, the CIC Investment Fund’s value had suffered a 99.42 percent decline, leaving a balance of only $30,000. Despite these staggering losses, WILSON continued to represent to investors that the fund was doing well and caused monthly statements and checks to be sent to investors showing that they were receiving the promised return. The funds that were not deposited in the brokerage account were left in a bank account that WILSON used to make lulling payments to investors and to pay for a lavish lifestyle. He used this money on a $400,000 down payment on his personal residence in Folsom, a $118,000 down payment on a Lamborghini, and a $90,000 down payment on a boat. WILSON failed to report this income on his 2006 tax return.
Before embarking on this scheme, WILSON changed his name from Stephen K. Wilson to Stefan A. Wilson, a change that would have helped to conceal from investors the fact that he had a 2002 fraud conviction and a 2005 bankruptcy.
Several of WILSON’s victims spoke at the sentencing hearing and described the devastating effect of his crime. One victim related how WILSON took money from his son, a disabled war veteran, knowing that he had already lost most of the investors’ money. Another investor described how three generations of her family lost money in the scheme including her octogenarian parents who lost their farm that had been in the family for nearly 60 years and was paid off until WILSON convinced them to refinance it. Victims also described how WILSON, a former youth minister, lied to them about donating 10 percent of his profits to Christian charities and how they trusted him because of his affiliation with the church.

August 24, 2009
Hedge Fund Manager Who Raised $44 Million in Scheme That Bilked Relatives Pleads Guilty to Fraud Charges
The founder and manager of two Beverly Hills hedge funds pleaded guilty today to federal fraud charges, admitting that he ran a Ponzi scheme targeting family members who suffered losses of more than $25 million.
Bradley L. Ruderman, 46, of Beverly Hills, pleaded guilty to two counts of wire fraud and two counts of investment adviser fraud related to the Ponzi scheme he ran from 2003 through 2009. Ruderman also pleaded guilty to a misdemeanor count of failing to file a federal income tax return for the year 2007.
Appearing this morning before United States District Judge John F. Walter, Ruderman admitted that he collected more than $44 million from investors, many of whom were family members who were promised annual returns as high as 60 percent. Ruderman admitted that he used much of the money to pay his own expenses and that he hid the misappropriation of investor money from his victims by sending them phony account statements that purported to show gains in their accounts. When the funds collapsed in April, Ruderman’s investors had lost more than $25 million.
Ruderman used false and misleading statements to persuade family members, friends and others to invest in his two hedge funds, Ruderman Capital Partners and Ruderman Capital Partners A. Ruderman lied about profits made by the funds, repeatedly sent false account statements to investors, and reported that he had $206 million in funds under management, when he actually had only $588,246 under management at the beginning of this year.
The FBI investigation revealed that Ruderman spent at least $8.7 million of investor money on personal expenses, which included a summer rental on Malibu's Carbon Beach and two Porsches. Ruderman further admitted that he lost $5.2 million of investor money in clandestine poker games held on a regular basis in a suite at a luxury Beverly Hills hotel.
Ruderman also pleaded guilty to failing to file his federal income tax return for 2007, a year in which he admitted earning more than $2 million. As part of his plea agreement with the government, Ruderman admitted that he failed to report income every year since 2004. He has agreed to file tax returns for those years and to resolve all taxes, penalties and interest due to the government.
Judge Walter is scheduled to sentence Ruderman on December 7. As a result of today’s guilty pleas, Ruderman faces a statutory maximum sentence of 51 years in federal prison. This case was investigated by the Federal Bureau of Investigation and IRS-Criminal Investigation

August 3, 2009
Glendale Man Sentenced to Over Seven Years in Federal Prison for Running $14 Million Ponzi Scheme
A Glendale man was sentenced today to 87 months in federal prison for orchestrating a $14 million Ponzi scheme, one of the three frauds that led him to plead guilty in three separate cases earlier this year.
Antoine David Haroutunian, 47, was sentenced today by United States District Judge Percy Anderson in relation to the Ponzi scheme. In addition to the prison term, Judge Anderson ordered Haroutunian to pay nearly $10.7 million in restitution, including an initial payment of more than $850,000 that is due immediately.
In imposing the 87-month sentence, Judge Anderson said that Haroutunian was worse than a thief. “A pickpocket doesn't know the people he is stealing from,” Judge Anderson said, but Haroutunian “was a financial predator who had no compunction going back over and over to victims he knows.”
From June 2005 through August 2008, Haroutunian solicited investor funds through his companies, Luminous Wealth Management and Luminous Management, promising 24 percent annual returns. When he pleaded guilty, Haroutunian acknowledged that he used written materials and in-person meetings to solicit potential investors, who were told that Luminous held investments in commercial bridge loans, U.S. government-guaranteed loans, options and real estate investment trusts. In reality, Haroutunian made almost no investments, instead using victims’ funds to make Ponzi payments to other victim-investors; to fund cash payments to himself; to fund his other business ventures; and to make payments to his associates in Los Angeles, New York and Armenia. Haroutunian solicited investors through advertisements placed in the Los Angeles Times and on the Internet. In September 2006, the California Department of Corporations issued two desist and refrain orders that enjoined Haroutunian “from offering or selling or buying or offering to buy any security in the State of California.” Haroutunian ignored these orders while continuing to operate his investment scam that led to approximately $10 million in losses.
In a separate case, Haroutunian pleaded guilty in relation to a 2003 scheme he ran while employed as a customer service representative at Bank of America. Haroutunian used his account-access privileges to obtain customer account information that he and his associates used to withdraw funds from accounts without authorization. Haroutunian also admitted that he and his associates made unauthorized transfers from accounts by fraudulently writing checks on the accounts to themselves, their creditors and others. As a result of the conduct in this case, Bank of America suffered losses of more than $460,000. Haroutunian is scheduled to be sentenced in this case next Monday by United States District Judge Valerie Baker Fairbank, although he is expected to receive a sentence that will run concurrently to the 87-month sentence.
In a third case, Haroutunian pleaded guilty to tax fraud. By pleading guilty in the tax case, Haroutunian admitted that in 2004 he fraudulently obtained a federal tax refund of $183,345 that was based on fictitious gambling winnings and losses he falsely claimed on his personal tax return. Haroutunian is scheduled to be sentenced in this case next Monday by United States District Judge George H. Wu, who is also expected to issue a sentence to run concurrently with the 87-month sentence.

July 10, 2009
Leader of $73 Million Ponzi Scheme Sentenced Again to 30 Years in PrisonSecond Judge Says 30 Year Term “Rational and Reasonable”
JOHN W. ZIDAR, 66, formerly of Gardnerville, Nevada, was sentenced today in U.S. District Court in Seattle to 30 years in prison and three years of supervised release for leading what prosecutors call the largest Ponzi scheme ever prosecuted in the Western District of Washington. ZIDAR was originally sentenced by U.S. District Judge Barbara Rothstein in July 2003, for his multiple convictions for mail and wire fraud and money laundering. Recent rulings by the U.S. Supreme Court sent the case back for re-sentencing, once the sentencing guidelines became advisory, not mandatory. After a lengthy hearing, U.S. District Judge Ricardo S. Martinez said he believed the 30-year sentence Judge Rothstein imposed was the right one. “The defendant was the leader of a massive ‘Ponzi’ scheme designed to enrich the defendant....This is an extremely serious offense with widespread financial damage done to thousands of victims,” Judge Martinez said.
According to the evidence at trial, beginning in 1997 and continuing until 2000, ZIDAR and his co-conspirators convinced nearly 3,500 victims to invest in a series of purported investment funds called Vista International (Vista), Oakleaf International (Oakleaf), and Rosewood International (Rosewood). Investors were told that these funds would be invested in the “private economic arena.” Investors were directed to send their applications to an address in Enumclaw, Washington, and were directed to send their investments to the same address or to wire them to a bank account in Lakewood, Washington.
ZIDAR and his co-defendants promised investors a return of 120 percent per year and told investors their principal was assured against loss. Investors also were told that if they rolled a single unit over for 10 years it would be worth millions of dollars. In fact, the defendants actually were operating a Ponzi scheme, in which early investors were paid with later investors’ money. The evidence at trial established that the defendants diverted millions of dollars for their own use and benefit, including to purchase houses and expensive vehicles, and paid substantial commissions to the agents who solicited the investors. The defendants also laundered millions of dollars through bank accounts in Samoa, the Bahamas, and Costa Rica.
Prosecutors and a court-appointed receiver were able to locate about $25 million of the money taken by fraud, and it was returned to the investors who received about 40 cents for each dollar they had invested.
In their sentencing memo today, prosecutors quoted the impact statements from victims. Many said they had lost their life savings, their homes and retirement accounts. “We lost our home. The children have had to go without birthday and Christmas gifts. They had to sell off their toys. My son who is 18 has no money for college....We have had to beg for help from government/church. We have all suffered depression & anger,” one victim wrote.
At sentencing, Judge Martinez noted the damage to those investors saying, “If they were devastated seven years ago, imagine how they are faring in today’s economic downturn.”
In asking for the Judge to again impose 30 years, prosecutors referenced the recent sentencing for Bernard Madoff. “As Judge Chin recently noted in sentencing Bernard Madoff to 150 years’ imprisonment, Madoff’s crime was ‘extraordinarily evil,’ it was ‘not merely a bloodless crime that takes place on paper but one that takes a staggering human toll.’ It is true that Madoff’s scheme was larger than Zidar’s, but the two cases are not qualitatively different. Zidar’s conduct was just as evil, and his crime took as significant a toll on many of his nearly 3,500 victims. Madoff, who was sentenced to 150 years, will never leave prison. Zidar is fortunate that a sentence of 30 years (approximately 26 years assuming good time) allows Zidar a chance to leave prison,” Assistant United States Attorney Andrew Friedman wrote to the court.

May 22, 2009
Four Charged in Bizarre Shake Down Connected to $40 Million Ponzi Scheme
Acting United States Attorney Lawrence G. Brown, FBI Special Agent-in-Charge Drew Parenti, and IRS-Criminal Investigation Special-Agent-in-Charge Scott O’Briant announced that MICHAEL DAVID SANDERS, aka David Dennis SANDERS, 41, of Fair Oaks, Calif.; CRAIG ANDERSON, 39, of Chicago; CASSANDRA MOORE, 26, of Beverly Hills, Calif.; and SEAN SMARTT, 41, of Sacramento, have been indicted in a conspiracy to impersonate an officer and employee of the United States.
This case is the product of a joint investigation by the FBI and the IRS-Criminal Investigation.
According to Assistant United States Attorney Robin R. Taylor, who is prosecuting the case, the defendants were attempting to recover funds for investors who lost money in a Ponzi investment fraud scheme carried out by ANTHONY VASSALLO, who was charged with mail fraud, wire fraud, and money laundering offenses on April 15, 2009. VASSALO’s firm, Equity Investment Management and Trading Inc. (EIMT"), lost virtually all of the investors’ money, and ceased trading in securities in about September 2007.
In what is alleged to be an attempt to recoup investor money, on or about March 8, 2009, SANDERS, ANDERSON, MOORE and SMARTT entered an office suite in Folsom, Calif. where a prearranged meeting was taking place with three hedge fund operators and two others. Several of the defendants wore bullet proof vests, ear pieces, hand cuffs, and badges. More than one of the defendants was carrying a radio and a gun. As they entered, SANDERS and ANDERSON announced loudly to the hedge fund operators that the defendants were with the FBI and the United States Security and Exchange Commission. ANDERSON stated that MOORE was on the “federal level,” and it was up to her if charges would be filed in an ongoing investment fraud investigation of EIMT.
SANDERS and ANDERSON paced around the office, exposed their weapons, and blocked the entrances and exits of the office suite. One of the co-conspirators told the hedge fund operators that the defendants were there to collect funds taken from the EIMT account for victims of a fraud. ANDERSON told the hedge fund operators that they had until noon on Monday, March 9, 2009, to wire $378,300.16 to a Patelco Credit Union bank account in the name of the "Spirit Foundation" and to send an e-mail confirmation an email address they provided. The defendants left a sheet of paper with the wiring instructions, routing number, account number, bank name, amount, and an email address.
SMARTT appeared today in court before United States Magistrate Judge Gregory G. Hollows and was released on bond. SANDERS, who was previously released on bond, has his next court appearance on June 5, 2009. Court dates for ANDERSON and MOORE have not yet been set.
The defendants face up to five years in prison for the conspiracy charge. However, the actual sentence will be dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and will be imposed at the discretion of the court. The charges in the criminal complaints are only allegations and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

April 15, 2009
Folsom Man Indicted in $40 Million Ponzi SchemeDefrauded 150 Investors, Many from His Church
Acting United States Attorney Lawrence G. Brown, FBI Special Agent-in-Charge Drew Parenti, and IRS-Criminal Investigation Special-Agent-in-Charge Scott O’Briant announced that a grand jury has returned an indictment alleging mail fraud, wire fraud, and money laundering against ANTHONY VASSALLO, 29, of Folsom, Calif. for his role in a massive investment fraud scheme that brought in more that $40 million from 150 investors, many of whom he met in church. VASSALLO will next appear in court on April 16, 2009, at 2:00 p.m. before United States Magistrate Judge Dale A. Drozd.
This case is the product of a joint investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigations. The United States Securities & Exchange Commission assisted with this case.
“In these difficult economic times, it is more vital than ever that federal investigative and prosecutive resources are brought to bear against those who perpetrate large-scale fraud schemes,” says Acting U.S. Attorney Brown.
Investment Ponzi Scheme
According to Assistant United States Attorney Robin R. Taylor, who is prosecuting the case, VASSALLO and others operated Equity Investment, Management and Trading Inc. (EIMT) in Folsom, soliciting investors for a “hedge fund” program. He promised investors a rate of return of 3.5 percent per month with little risk of loss.
The indictment alleges that these representations were false and that VASSALLO and others operated EIMT as a vast Ponzi scheme using investor funds to make “dividend” payments to other investors and make risky loans without investor knowledge or consent. Although VASSALLO lost virtually all of the investors’ money, and ceased trading in securities in about September 2007, he lulled investors into keeping their funds on deposit by fabricating investment information and reporting positive returns. Neither VASSALLO nor EIMT was registered with the SEC. According to the indictment, rather than investing funds as represented, VASSALLO used investor funds for personal expenses, to purchase a car from Lexus of Sacramento for $103, 215.94, and to make a payment to the Church of Jesus Christ of Latter-Day Saints in Folsom, California for $24,149. The balance of the funds were used to make lulling payments to other investors, lost in risky investments or transferred to third parties without investor knowledge or consent.
Civil Action
On March 11, 2009, the SEC charged VASSALLO and KENNETH KENITZER, 66, of Pleasanton, Calif., with the anti-fraud provisions of the federal securities laws for their roles in the fraudulent investment scheme. The SEC obtained a court order against VASSALLO and KENITZER freezing the assets of EIMT. In addition, the SEC seeks injunctive relief, disgorgement of fraud proceeds, and financial penalties. The SEC has frozen $1.2 million found in a bank account controlled by VASSALLO.
VASSALLO originally was charged in a criminal complaint, along with his co-defendant MICHAEL DAVID SANDERS. SANDERS is accused of conspiracy, impersonating a federal law enforcement agent and with attempting to extort monies in connection with plot to recover funds for EIMT investors. He has not been indicted; a preliminary hearing is set for May 1, 2009.
Statutory Penalties
If convicted, VASSALLO faces up to 20 years in prison for the mail and wire fraud offenses; up to 20 years for the money laundering offenses; and up to 10 years in prison the securities law violations, with fines up to twice the value of the victims’ losses. SANDERS faces up to five years in prison for the conspiracy, up to three years in prison for impersonating a federal law enforcement agent, and three years for extortion. However, the actual sentence will be dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and will be imposed at the discretion of the court. The charges in the indictment are only allegations and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

February 5, 2009


Scheme Solicited Investments for Development of Oil and Gas in Southeast Asia
A grand jury in Seattle, Washington, has indicted ROBERT MIRACLE, MUKHTAR KECHIK, and FAHIMI FISAL in a twenty-three count Indictment charging Conspiracy, Mail Fraud, Wire Fraud, Money Laundering, and Tax Evasion. The Indictment alleges that the men operated a $65-million “Ponzi” scheme. MIRACLE, 48, was arrested at his home in Bellevue this morning, and will be arraigned on the Indictment this afternoon at 2:30. KECHIK, 52, and FISAL, 32, both are Malaysian nationals. Warrants have been issued for the arrest of KECHIK and FISAL.
According to the Indictment, MIRACLE operated a number of companies allegedly involved in oil development in Malaysia and Indonesia, including: Laramie Petroleum, Inc.; MCube Petroleum, Inc.; Diski Limited Liability Company; Basilam Limited Liability Company; and Halmahera-Rembang Limited Liability Company. MIRACLE and his co-defendants represented to investors that these companies were making money from oil-field development and from the sale of oil-field services. In fact, the funds of later investors were used to pay off the investments of earlier investors. Between September 2004 and October 2007, MIRACLE took in more than $65 million from investors and paid out more than $36 million in returns to investors, using funds from later investors. The remainder of the investor monies—more than $28 million—was used in a failed effort to develop oil and gas on fields in Indonesia, as well as to pay for a lavish lifestyle for MIRACLE and his cohorts.
According to the Indictment, as part of the conspiracy, MIRACLE allegedly mislead investors both about his business background, and about the success of the companies he promoted. MIRACLE falsely claimed to have been employed by NASA and Disney. MIRACLE also allegedly falsely claimed that his companies actually were producing and selling oil and gas. Between 2004 and 2007, MIRACLE issued a number of press releases and “investor updates” touting his companies’ successes. According to e-mails referenced in the Indictment, the conspirators plotted to make false financial statements, which they referred to as “simulation files,” that falsely showed that the companies were producing oil and gas, and receiving revenues from the sale of that oil and gas. MIRACLE also allegedly created false bank documents to support their fraud.
As part of the Indictment the government is seeking to forfeit a two-carat diamond ring MIRACLE purchased for more than $38,000 and a painting that MIRACLE purchased in Italy for $27,000. The Indictment also alleges that MIRACLE used investor funds to take ten of his family members on a week-long cruise at a cost of more than $77,000, and that he evaded taxes on more than $527,000 of income in 2005 by falsely classifying the money that he received from his companies that year as loans to him from the companies, rather than as salary.
The charges contained in the Indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.
The case is being investigated by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigation Division, and the Washington State Department of Financial Institutions.

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