Tag: Ponzi

All Ponzi schemes topple eventually

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One week ago, as cryptocurrency prices plummeted, Celsius Network – an experimental cryptocurrency bank with more than one million customers that has emerged as a leader in the murky world of decentralized finance, or DeFi – announced it was freezing withdrawals “due to extreme market conditions”.

Earlier this past week, Bitcoin dropped 15% over 24 hours to its lowest value since December 2020. Last month, TerraUSD, a stablecoin – a system that was supposed to perform a lot like a conventional bank account but was backed only by a cryptocurrency called Luna – collapsed, losing 97% of its value in just 24 hours, apparently destroying some investors’ life savings.

Eighty-nine years ago, Franklin D Roosevelt signed into law the Banking Act of 1933 – also known as the Glass-Steagall Act. It separated commercial banking from investment banking – Main Street from Wall Street – to protect people who entrusted their savings to commercial banks from having their money gambled away.

Glass-Steagall’s larger purpose was to put an end to the giant Ponzi scheme that had overtaken the American economy in the 1920s and led to the Great Crash of 1929…

Which brings us to the crypto crash.

I know a few folks who’ve been gambling in crypto since the advent of Bitcoin. I hope they’ve they’ve “taken the money and run”! I know a little bit about Ponzi schemes and 1929. RTFA for the beginning of the discussions coming up in the near future.

Expatriate fugitive finally busted in Mexico

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Rebecca Parrett may have seemed like a typical retired expatriate in the small resort town of Ajijic, Jalisco, in central-western Mexico. But, Parrett, a fugitive of two and a half years, was living under a made-up identity, escaping U.S. officials and a 25-year prison sentence.

Parrett fled in March 2008 after a jury in Columbus, Ohio, convicted her of charges including securities fraud, wire fraud and conspiracy in a $1.9 billion corporate fraud case…

Parrett was the only person to flee her conviction despite being a co-defendant with her former husband, Donald Ayers, and several other executives of a company she co-founded, National Century Financial Enterprises, in Columbus.

National Century was supposed to pay medical companies for future insurance bills and claims to be re-sold as bonds. But the company eventually became a giant Ponzi-like scheme, officials said…

Parrett described herself as an innocent woman from West Virginia without a college degree who worked her way up to become a medical billing executive.

“It’s very sad to be the victim of a political bureaucracy that has abused its power beyond imagination over and over again,” she wrote in the preface. “There were many victims. I am only one small dot on a giant map that the government controls…”

She can start her own Tea Party chapter in the slammer.

Parrett told people she had testified in a fraud case in the United States and was living in Mexico for her safety.

Joseph Scott, a former defense lawyer in Ohio for Parrett and her sister, Linda Case, described Parrett as “definitely successful” at several business endeavors before her career began at National Century.

“She was a very hard-working woman,” Scott said. “She put in a lot of hours and stayed up to date with modern technology. She was not afraid of a challenge.”

Probably will work her way up to supervisor of the prison laundry.

Minnesota, God and the $190 million fraud

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Now, do we get the Kool-Aid?

1,200 investors, and more than $190 million lost in just 3 years. It all began as market turmoil gained momentum in the run-up to the Great Recession, and investors were searching for a safe haven for their savings.

Minnesota money manager Trevor Cook and radio show host Pat Kiley said they had the answer, with the promise of solid returns and a no-loss guarantee. The Securities and Exchange Commission, however, calls it a “scheme to defraud perpetrated by Cook and Kiley…”

Kiley, 72, used the airwaves to get the word out on his weekly Christian radio program, “Follow the Money.” Kiley called his listeners “truth seekers” and appealed to their distrust of Wall Street and the government…

Cook and Kiley told investors that they could withdraw their money at any time. Now almost all the money is gone, and investors are out of luck…

Cook, according to the SEC, used $51 million collected from investors in later years to pay off early investors — a classic Ponzi scheme structure similar to the one orchestrated by Bernie Madoff. As with Madoff, Cook’s investors were given phony account statements that “falsely reported substantial, continuing gains,” according to the SEC.

In its complaint, the SEC says that Cook and Kiley diverted nearly $43 million, “of their victims’ money to their own personal purposes … and for other illegal purposes…”

Some investors were drawn in through Kiley’s radio show. In fact…Kiley claims his radio program brought in 75% of the funds raised in the foreign currency program…

Merri Jo Gillette, who heads the SEC’s Midwest division in Chicago, says even with an enforcement staff of 100 overseeing a 9-state region, the agency is understaffed and is “light-years behind the industry” technologically due to lack of funding. “Nobody’s gonna protect you from these folks except yourself,” Gillette told CNNMoney.

If it sounds too good to be true, it probably isn’t.

If it sounds too good to be true – but, “God says it’s safe” – run for the nearest exit!

Tracking down the Billion$ withdrawn before Madoff was arrested

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Daylife/Getty Images used by permission

About $12 billion was pulled out of accounts at Bernard L. Madoff’s firm in 2008, according to several people briefed on an analysis of Mr. Madoff’s business records. About $6 billion, or half, was taken out in just the three months before the financier was arrested in December and charged with operating an extensive Ponzi scheme.

Those figures offer a bit of hope for Mr. Madoff’s thousands of defrauded customers. Under federal law, the trustee overseeing the Madoff bankruptcy can sue to retrieve that money from the investors who withdrew it.

Indeed, the trustee, Irving H. Picard of Baker & Hostetler, filed two lawsuits on Tuesday seeking the return of a total of $6.1 billion, which he estimated had been withdrawn over the last decade.

One case seeks the return of $5.1 billion from various trust funds and partnerships run by Jeffry M. Picower, a prominent Palm Beach, Fla., investor whose charitable foundation was considered one of the notable victims of Mr. Madoff’s fraud.

Mr. Picard also sued to recover $1 billion withdrawn last year by Harley International, a hedge fund based in the Cayman Islands and administered by a unit of the Dutch bank Fortis.

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Ponzi schemer untouchable because of DEA connection?

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Daylife/AP Photo used by permission

Evidence has emerged that the Texan who bankrolled English cricket may have been a US government informer.

Sir Allen Stanford, who is accused of bank fraud, is the subject of an investigation by the BBC’s Panorama.

Sources told Panorama that if he was a paid anti-drug agency informer, that could explain why a 2006 probe into his financial dealings was quietly dropped.

Sir Allen vigorously denies allegations of financial wrongdoing, despite a massive shortfall in his bank’s assets. Of the $7.2bn in deposits claimed by the bank, only $500m has been traced.

Secret documents seen by Panorama show both governments knew in 1990 that the Texan was a former bankrupt and his first bank was suspected of involvement with Latin American money-launderers.

In 1999, both the British and the Americans were aware of the facts surrounding a cheque for $3.1m that Sir Allen paid to the Drug Enforcement Administration (DEA). It was drug money originally paid in to Stanford International Bank by agents acting for a feared Mexican drug lord known as the ‘Lord of the Heavens’.

On 17 February of this year, the US Securities and Exchange Commission (SEC) accused Sir Allen of running a multi-billion dollar Ponzi fraud…civil charges he has denied.

Two and a half months after the SEC filing, the Texan has not yet faced criminal charges.

He was initially investigated by the SEC for running a possible Ponzi fraud in the summer of 2006, but by the winter of that year the inquiry was stopped.

Panorama understands that the decision was taken because of a request by another government agency.

In recent years – actually going all the way back to Ollie North and CIA drugs involvement – the U.S. government has dabbled in chasing vs. partnering with drug lords as the wind blew one way or another in the absolutely useless War on Drugs.

I trust all of these clowns about as far as I can throw them uphill into a heavy wind. Unprincipled thugs no different from their officially-criminal buddies.

Bank of America sued for aiding Internet Ponzi scheme

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Daylife/Reuters Pictures

Victims of an Internet-based Ponzi scheme have filed a lawsuit against Bank of America and the organizers of the scheme in the United States District Court for the District of Columbia.

Using elaborate misrepresentations, including numerous video postings on YouTube, organizers induced victims from around the country to purchase so-called “ad packages” from the following entities: AdSurfDaily, AdSurfDaily Cash Generator, Golden Panda Ad Builder, and La Fuente Dinero. The scheme promised that participants could earn large rebates for viewing web advertisements and commissions for referring additional participants.

Hundreds of millions of dollars were collected from approximately 140,000 victims across the country, in amounts ranging from $500 to $250,000 at large rallies and through online deposits…

At least one other financial institution closed the accounts of the organizers for suspicious activity, according to a sworn government complaint. VISA also considered the enterprise suspicious and would not process charges directed to the scheme by would be victims. And the very popular PayPal payment system rejected efforts by participants to purchase “ad packages” using their system.

Beginning in November of 2006, Bank of America allegedly allowed the scheme’s main perpetrator carte blanche at the bank. The complaint claims the scammers opened and maintained at least 10 separate accounts for running an unlawful Ponzi scheme. These accounts were opened at a tiny Bank of America branch in Quincy, Florida under various “doing business as” designations.

The suit claims Bank of America looked the other way when these accounts amassed deposits in the tens of millions of dollars from thousands of individual transactions.

There is an established range of regulations requiring oversight from bankers over activities like these. Most require reporting suspicious activity to the Feds. Surely looks like someone in the food chain at BofA was looking the other way. Deliberately.

Madoff offered you a chance to join The Inner Circle

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Palm Beach Country Club – a Madoff hunting preserve

If something sounds too good to be true, I keep reading, that must be because it is too good to be true…

The point about Bernie Madoff was not so much what he was selling, it was how he sold it. For that he relied on a powerful but elementary piece of human psychology: the more someone tells you that you cannot have something, the more you want it.

Membership of the Madoff fund was very strictly by invitation only – merely being rich was not enough in itself.

Clients were recruited through the social networks of which Mr Madoff and his wife were themselves members – many were Jewish New Yorkers who spent part of the year in Florida.

Others came across the charming, wealthy, discreet giant of Wall Street at the golf club or the yachting marina.

They were mainly, in other words, people who should have known better and they fell for one of the oldest illusions in the book: that there is an inside track in the world of investment.

Mr Madoff fed that illusion, and offered himself as the man who could offer you access to that magic, secret circle.

Don’t forget P.T.Barnum’s favorite rule: There’s a sucker born every minute!

Former Nasdaq head arrested for $50 billion hedge fund fraud

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Madoff’s investors celebrate the holiday season – asking where their money went?
Daylife/AP Photo by Diane Bondareff

The former chairman of the Nasdaq stock market has been arrested and charged with securities fraud, in what may be one of the biggest fraud cases yet.

Bernard Madoff ran a hedge fund which ran up $50bn (£33.5bn) of fraudulent losses and which he called “one big lie”, prosecutors allege. Mr Madoff is alleged to have used money from new investors to pay off existing investors in the fund.

The collapse of Madoff is likely to accelerate the disappearance of hedge funds

According to the US Attorney’s criminal complaint filed in court, Mr Madoff told at least three employees on Wednesday that the hedge fund business – which served up to 25 clients and had $17.1bn of money under management – was a fraud and had been insolvent for years, losing at least $50bn.

He said he was “finished”, that he had “absolutely nothing” and that “it’s all just one big lie”, and that it was “basically, a giant Ponzi scheme”, the complaint said.

He told them that he planned to surrender to the authorities but not before he used his last $200m-$300m to pay “selected employees, family and friends“.

Dan Horwitz, Mr Madoff’s lawyer, said: “Bernard Madoff is a longstanding leader in the financial services industry. We will fight to get through this unfortunate set of events.”

“Unfortunate set of events?” You represent a fracking crook.

This schmuck defrauded investors of enough money to bail the automobile industry a couple of times over.

Judge orders $11 million repayment by Christian Ponzi hustlers

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The original: Charles Ponzi

A judge has ruled that the owners of a non-profit Christian investment company committed fraud and called for them to repay $11 million to investors they swindled in Arizona and 11 other states.

The ruling crowns a three-year investigation by the Corporation Commission into Valley-based Nakami, which investigators say targeted churchgoers as part of a Ponzi scheme, including at least one pastor, church elders and members of Chandler Christian Church and Vineyard Church in Avondale.

Gregg Wolfe last year agreed to turn state’s evidence and admitted to investigators that he and Ed Purvis for years funneled millions of dollars in investors’ money into offshore accounts as part of the scheme.

The civil ruling could lead to a criminal-fraud investigation into a case that has already involved accusations of fraud, bribery of a police officer, harassment of public officials and a series of bizarre legal filings against lawyers, a judge, investigators and a reporter.

Why hasn’t this resulted in criminal fraud prosecution, already?

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