Fleecing Central

Opening the Door for More Ponzi’s?!

Is that even possible? According to a bunch of attorneys attending the Financial Services Institute conference in New Orleans this week… yes, it’s not only possible, it’s probable. The discussion involves proposed regulatory reform that would give states greater oversight of RIAs. Problem is that some states may not be well-equipped to do so, leaving the door open to those nasty Ponzi artists showcased here on FC. See more in Investment News. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20100126/FREE/100129913/1094/INDaily01

A Big Week for Securities America

Just days after Securities America’s CEO announced his upcoming retirement, the Massachusetts Security Division filed a complaint against the broker-dealer claiming it misled investors. According to the complaint, Securities America forgot to mention some pretty important info when it sold $697 million in promissory notes issued by Medical Capital Holdings as private-placement securities. Securities America officials deny the charges and claim the CEO change-out is unrelated… Stay tuned for the next installment of saga and read more details in Investment News here. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20100126/FREE/100129909/1094/INDaily01

Fair Finance… Maybe Not So Fair

Indiana businessman Timothy Durham acquired the long-established investment firm Fair Finance in 2002. In the ensuing years Durham and his partner took the firm from fair to suspect. The FBI raided the firm’s offices and is investigating a lawsuit claiming Fair Finance functioned as Durham’s own personal bank. Keep an eye on this case as the political fallout from Durham’s connections has only just begun. Super-rich Timothy Durham may soon be re-dubbed super-slick. See the full story at WSJ.com. http://online.wsj.com/article/SB10001424052748703344704574610571204462690.html

Big Money, Hot Rods and Hit Men

It’s a quirky combination of fraud and thuggery. So goes the trial of accused Ponzi schemer Jeffery Mowen. As charges of fraud are argued, Mr. Mowen’s enormous car collection is prepared for auction in case proceeds can be used to pay back the investors it’s said that Mowen bilked. Car collector experts expect the auction to bring in up to $3 million, but they consider Mowen’s private collection to be more trashy than classy. Think razor blade adornments, Marilyn Monroe decals and a 1995 Chevy Impala with 80K miles. Mowen thought the collection would impress potential investors, but FC doubts it. Get more details in The New York Times. http://www.nytimes.com/2010/01/08/us/08auction.html

Brookstreet on the Hot Seat Again

The SEC is now accusing Stanley Brooks, fondly known as “Uncle Stan,” of fraud. Brooks is said to have sold unsuitable CMOs totaling $300 million. He’s the most recent, and most high-profile Brookstreet Securities representative to come under fire. Perhaps they simply misunderstood their investors’ risk tolerance. See the whole story in Investment News. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091209/FREE/912099981/1094/INDaily01

WWJD? Probably Not Lie and Steal.

A former bishop with The Church of Jesus Christ of Latter-Day Saints is accused of operating a $21 million Ponzi scheme from his Denver home. Authorities have accused former stockbroker Shawn Merriman of bilking clients for 15 years. But instead of investing client funds, Merriman took exotic trips (not humanitarian missions) and built up his classic car collection. Check out the details at Investment News. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091203/FREE/912039997/1094/INDaily01

Madoff Stole the Spotlight. Yagodayev Stole $11 Million.

As Madoff was splashed across headlines, Mr. Genadi Yagodayev of Queens, NY took advantage of the diversion by creating a Ponzi scheme of his own. In just eight months, he managed to take in $11 million for his Rockford Funding Group promising up to 21% returns. The SEC has its doubts about that, and Yagodayev is due at federal court for a hearing on the matter. See the story in Investment News. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091209/FREE/912099983/1094/INDaily01

Divine Intervention or Fraudulent Intentions?

According recorded conversations of Thomas Petters, his scheme was successful and undetected for quite some time thanks to “divine intervention.” Whatever you say, Petters. But a Minnesota jury found him guilty of 20 “criminal intentions” where he used his company, Petters Co. Inc. (PCI) to front an illegal cash-raising scheme. Throughout his trial, Petters pointed fingers at PCI’s VP and CFO, attempting to shed responsibility. Where’s that divine intervention now? See the full story at Bloomberg.com. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=asG2pde7N2wM

Powerful Female Persuasion

It’s said that New Castle Funds’ Danielle Chiesi leveraged her uniquely female attributes to woo insider tips from company executives. And not only did she regularly finesse her way to advantageous information – she boasted of her relationship-building to colleagues. Thanks to her willingness to share, U.S. authorities managed to nab her on charges of fraud and insider trading. Get the full story at Bloomberg.com. http://www.bloomberg.com/apps/news?pid=email_en&sid=apTuckYhnYYU

Scott Rothstein Could Inspire a New Season of “The Sopranos”

Practically ripped from the script of a Mafia classic, Scott Rothstein is finally slapped with numerous charges related to an alleged investment scheme, including RICO charges. According to FBI investigators, Rothstein has cooked up quite an elaborate system of phony legal settlements, money laundering, law enforcement pay-offs and much, much more. FC places its bets on James Gandolfini to play lead when this becomes a made-for-tv movie of the week. See all the juicy details at MSNBC.com. http://www.msnbc.msn.com/id/34221626/ns/business-us_business/

TD Bank Sucked Into Rothstein Quagmire

The Scott Rothstein saga in Fort Lauderdale has now ensnared TD Bank. The Canadian financial company is now the target of a $100 million lawsuit claiming the bank was complicit in the Rothstein Ponzi scheme. Apparently enormous sums of money were passing through the bank with no red flags raised. Seemed like a win-win arrangement while it lasted. See more in Investment News. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091120/FREE/911209980/1094/INDaily01

 

Track Record Selling Bogus Bonds

With several years under his belt of peddling bogus bonds, Jeffrey Southard of New Jersey is a master of illusion. But one thing is for real: He’ll spend 97 months in federal prison for his crimes.  Most recently, he was convicted and sentenced for his role in a $1.8 million fraud scheme selling non-existent securities. Southard was suspended from Ameriprise in 2003. He was barred by the New Jersey Bureau of Securities barred him for theft from elderly clients in 2008. GunnAllen also investigated Southard in 2008 for sale of non-existent investments. Perhaps a few years behind bars will break him of his lying, cheating ways. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091123/FREE/911239991/1094/INDaily01

Laissez Les Bons Temps Roulez

That’s French for let the good times roll all over innocent investors. Louisiana businessman William Chaucer Jr. is said to have concocted a wide-reaching Ponzi scheme to the tune of $11 million. Thanks to his good fortune and his clients unwitting cooperation, Mr. Chaucer was able to finance his wife’s triumph in the Ms. Louisiana Senior America 2008. Not to mention hefty Mardi Gras expenses, a little plastic surgery, jewelry, and an overall lavish lifestyle. Now, those are seriously good times. See more in Investment News. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091119/FREE/911199981/1094/INDaily01

Hint: 1000% Returns Could Be Unrealistic

Hard to believe investors actually fall for this, but it’s true. A couple of Omaha companies were promising clients 1000% annual returns. The Nebraska Department of Banking and Finance ordered them to discontinue sales and the circumstances are suspicious. Going forward, FC orders readers to discontinue all confidence and trust in completely ridiculous promises. Follow the Investment News story starting here. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091118/FREE/911189992/1094/INDaily01

Sneaky Switcheroo

Unbeknownst to her, William Blair client Josephine DesPart’s account status was changed from non-discretionary and commission-based to discretionary and fee-based. On top of it all, the two former William Blair brokers set up a fake email account where her account statements were shifted. The two brokers defended themselves against the 88-year-old widow’s lawsuit, explaining they didn’t intend to conceal transactions from her. Attention Morgan Stanley Smith Barney clients: the two brokers in question, William Ross and Brian Kasal are now employed there, so keep an eye on those accounts. See the Investment News story here. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091118/FREE/911189976/1094/INDaily01

Fleecing Central Meets the Big Screen

Drama isn’t just for the movie set in Nicolas Cage’s world. He filed a lawsuit against his former manager, Samuel Levin for incompetence seeking $20 million in damages. Cage is facing financial ruin, but he’s also facing a counter suit from Levin for fees due to him for professional services. Levin says money was squandered. Cage says he was left in the dark. It’s sure to be a mystery-suspense thriller. FC can’t wait to see the ending. You can see the details at CNN Money.com. http://money.cnn.com/2009/11/17/pf/Nicolas_Cage_lawsuit_manager.cnnw/index.htm

Rocky Mountain High Losses

Jerrald Green of Denver is accused of running a Ponzi scheme, racking up to $12 million. The good news is that Mr. Green claims the whole ordeal is just a “misunderstanding.” Mmmm hmm. The Colorado securities commissioner notes in a civil case that Green received $12.5 million in investments, but only actually invested $4.9 million. FC will be keeping an eye on this misunderstanding. See Investment News for more info. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091111/FREE/911119982/1094/INDaily01

“Three Hebrew Boys” Recreating an Inferno

South Carolina crooks, Timothy McQueen, Joseph Brunson, and Tony Pough dubbed themselves the “three Hebrew boys” in reference to the biblical story of boys who withstood an inferno for their faith. It’s unclear how on earth to make such a biblical connection when these modern-day scoundrels were bilking millions from unsuspecting investors. See the Investment News story here.

http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091111/FREE/911119994/1094/INDaily01

Only Thing Green is the Money

The SEC doesn’t care for Mantria Corp’s idea of green investments. And neither do the elderly investors who were robbed of more than $30 million. Turns out this questionable company was dealing in organic waste with absolutely no value. Catch the details from Financial Advisor Magazine. http://www.fa-mag.com/green/news/4716-investors-lured-into-green-ponzi-scheme.html?tmpl=component&print=1&page

Life in the Fast Lane Slows Considerably

The fast lane may not be so fast now that authorities have seized Scott Rothstein’s Ferarri Spider. FC noted the Ft. Lauderdale attorney’s exploits in previous posts. But now the Wall Street Journal has dug deeper into Rothstein’s speedy lifestyle. The FBI is also digging deeply. See the full story here. http://online.wsj.com/article/SB125815195177647583.html

Free Lunch Isn’t So Free

Victims invested as much as $119,000 each for allegedly fake promissory notes offered by John Missitti and GetMoni.com. And it all started with free lunch seminars complete with photos of silos filled with silver. No, really? At least they got a bite to eat for their trouble. Detroit Free Press has the details. http://www.freep.com/article/200911171119/COL07/91117027

Ring of Lies Grows

Raj Rajaratnam is far from alone in a supposed ring of Wall Street crooks. Twenty Wall Street professionals and attorneys have been charged in a growing ring of insider trading. These folks are accused of breaching confidentiality and ethics in every which way. It’s hard telling where the federal prosecutor’s investigation will take us next. Read more in Investment News. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091105/FREE/911059990/1094/INDaily01

 

Cheaters Never Prosper… Or At Least Not for Long

Thanks to a friend in investment banking, hedge fund manager Joseph Contorinis is charged with investment fraud. Using inside information from his buddy, Contorinis allegedly made illegal trades. Although he managed to rake in $7 million, that cheat and win streak is over. Investment News has the story.  http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091106/FREE/911069980/1094/INDaily01

Seven Years for $5 Million

Virginia’s Mark Donnelly robbed clients of more than $5 million in an elaborate Ponzi scheme. In return for his guilty plea, a judge sentenced him to seven years in prison. That may be just enough time to figure out how to make an honest living. Check out the details in Investment News. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091106/FREE/911069976/1094/INDaily01

 

Even Madoff Knows it Takes a Village

It’s not easy being a fraud, even for Bernard Madoff. Come to find out, his long-time auditor is finally admitting to helping fuel the enormous Ponzi scheme. Accountant David Friehling pleaded guilty to charges of securities and investment advisor fraud. For approximately nine years, Mr. Friehling curiously overlooked stunning ‘irregularities’ in Madoff’s books from his modest office in suburban New City. Read the New York Post’s full report. http://www.nypost.com/p/news/local/madoff_auditor_deal_change_plea_9vbFfZFam7pj2xQqTYXeDM

Former John Hancock Advisor Accused of Forgery

How’s that for irony? John Mondello was an advisor with John Hancock Financial Services in Long Island, NY who allegedly forged the signature of his elderly client and robbed her of her $1 million nest egg. Though his name is synonomous with ‘signature,’ American patriot John Hancock would roll in his grave to hear of Mr. Mondello’s version of inking a contract. See the full Investment News story here. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091030/FREE/910309988/1094/INDaily01

Salt in Stanford’s Wounds

As if it could get any worse for the beleaguered Texas financier Allen Stanford, he is now being stripped of his knighthood by the Caribbean nation of Antigua and Barbuda. Yep folks, you read it right. Mr. Stanford was actually a Knight. In the absence of that respectable title, his inmate identification number will have to suffice. Get the scoop at Investment News. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091102/FREE/911029949/1094/INDaily01

Attorney Wins Bonus Points for Innovation

If FC had a grading scale for fraud, Scott Rothstein would get 50 bonus points for creativity. The Fort Lauderdale attorney is accused of promising investor returns on legal settlements in sex discrimination and whistle-blower cases. Investigators suspect there may be $100 million missing in action. Despite his innovative approach to revenue generation, it was actually Rothstein’s law partner who filed suit against him. Read the details in the Miami Herald. http://www.miamiherald.com/news/southflorida/story/1313158.html

That’s Charity?

Charles Harrison of Charlotte, North Carolina had his elderly clients convinced their $11 million in investments was funding non-profit organizations. That’s true only if you consider his fine clothing and personal entertainment a charitable pursuit. Harrison admitted to his crimes and will spend 14 years in prison. Get the details in Investment News. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091027/FREE/910279985/1094/INDaily01

An Investment Crime Whodunit

Patricia Cornwell now has real life fodder for her crime fiction, but investment fraud isn't really her forte. Cornwell is accusing Anchin Block &Anchin of mishandling her fortune. $40 million is gone and though it’s not all accounted for, one of the firm’s advisors is accused of taking $5,000 for his daughter’s bat mitzvah gift. Get the details from Investment News. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091023/FREE/910239986/1094/INDaily01

Terrorist Support Carries Big Ticket

Recently, FC pondered the massive investment thefts at the hands of Raj Rajarutnam. Come to find out, that Mr. Rajarutnam may be more than greedy. He’s accused of funding a group of suicide bombers of Sri Lanka. Now that’s about as bad as it gets, and that’s no joke. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091022/FREE/910229979/1094/INDaily01

Ponzi Mea Culpa

Richard Piccoli maintained an investment scheme for almost 30 years, luring victims with advertisements in Catholic newspapers and using clergy members as references. The New York crook confessed to bilking millions through his Gen-See Capital Corp. He has 20 years to do his penance. Here’s the full Investment News story. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091022/FREE/910229988/1094/INDaily01

Mets are Luckier with Money than Baseball

They don’t have the winningest record in MLB baseball, but the Mets hit a homerun on their investment with Bernard Madoff. The Mets ownership was one of the very few victims of the Madoff Ponzi scam to make a profit. To the tune of $48 million. But not so fast… Madoff’s court appointed trustee is set to reclaim the profits to repay those who lost. Win some lose some. See the Investment News story here. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091021/FREE/910219991/1094/INDaily01

Never Enough

Billionaire hedge fund manager Raj Rajaratnam is accused of insider trading that produced $12.7 million in illegal profits. Forgive FC, but at what point will these scammers figure out they already have enough money to support small countries? No need for piddley little insider trading jobs. Get the dirt at Investment News. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091016/FREE/910169982/1094/INDaily01

The High Life Has a Downside

Advisor Sean Healy is sorely disappointed to learn that the Ponzi party is over. According to the SEC, Healy used approximately $20 million he acquired through a Ponzi scheme to satisfy every whim. A fancy home in Florida, a vast collection of luxury automobilies, fine jewelry, and more. With a 55-count federal indictment on the horizon, Mr. Healy could be looking forward to a modest cell, three squares, and a one-size-fits-all jumpsuit. Investment News has the details here. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091016/FREE/910169982/1094/INDaily01

Former ING Rep Gets Pumped Up

Pennsylvania advisor Frank Peperno took money from his securities business, put it in a business bank account, and used some of it to purchase a gym.  Frank, FYI the Feds consider this money laundering. You can’t chalk this up to good physical fitness. See the Investment News story here. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091016/FREE/910169987/1094/INDaily01

Stanford Pointing Fingers From Behind Bars

In an effort to offload some blame for his notorious $7 billion financial scandal, R. Allen Stanford fingered two former advisors who served at his firm. The two men are being sued for more than $11 million that must be returned to clients. Perhaps the lawsuits comfort Stanford as he serves as someone’s punching bag in jail. Investment News has the details. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091015/FREE/910159978/1094/INDaily01

Fedorov Gets Checked in Scam

A pro on the ice got frozen out of $60 million in this scam. Former Detroit Red Wings hockey player Sergei Fedorov is suing to recover his millions lost in apparent penalty-laden investment mismanagement. See the Investment News story here. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091015/FREE/910159981/1094/INDaily01

Special Software Doesn’t Get the Money Back

A Chicago area investor conned his clients into believing that between his intelligence and his specialty software, he’d steadily deliver returns as high as 20%. As it turns out, however, his fancy software wasn’t good enough to return the hundreds of thousands of dollars he stole in this Ponzi scheme. Get the details from the Chicago Tribune here. http://www.chicagotribune.com/news/chi-fraud-indictment-15oct15,0,3826500.story

You've Been Friended... and Busted

Here’s tip number one when you’re on the run from the U.S. Justice Department: Refrain from updating your Facebook page with your whereabouts and hijinx. Tip number two: Don’t friend Justice Department officials. Fraud guru Maxi Sopo hadn’t brushed up on these rules of engagement and wound up in a Mexico City jail. Upon extradition to the U.S., Sopo will face bank fraud charges. This guy’s never heard of too much information. See all the ridiculous details in Investment News. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091014/FREE/910149984/1094/INDaily01

 

Rumeal! Are You For Real?!

According to federal charges, former basketball great Rumeal Robinson paid kickbacks to an Iowa banker for loans he didn’t plan to pay back. Seems that the athlete is no longer living the lush NBA life now that he’s in financial trouble. The most startling part of his downfall is that his mother is allegedly losing her home to foreclosure because of his misdeeds. Displacing your own mother?? Now that’s got to be rock bottom. See the Detroit News story here. http://www.detnews.com/article/20091014/SPORTS0201/910140334/U-M-hoops-hero-Rumeal-Robinson-accused-of-swindling-mom--others

Kicking Them When They’re Down

A Livonia, Michigan couple is accused of stealing $230,000 from funeral home clients who thought they were pre-paying for funeral arrangements. But instead of purchasing cemetery plots and such, this shifty couple was apparently digging themselves into trouble at least six feet deep. Here is the complete Detroit News story. http://www.detnews.com/article/20091014/METRO01/910140404/Prosecutor--Livonia-couple-swindled-$230K-from-funeral-arrangements

From Prison to Barnes & Noble

The same investment guy who is charged with scamming clients out of $1.5 million and then purposely crashed his own plane is now writing a book about how his bipolar disorder contributed to his downfall… How precious is this? Wonder how his mental health would be faring had he not gotten caught. Here’s the full Investment News story. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091012/FREE/910129984/1094/INDaily01

 

This Crook Just Keeps on Tickin’

Out of federal prison for mail fraud, Nicholas Cosmo allegedly proceeded to bilk $400 million in a Ponzi scam. While on house arrest, he then broke the terms of release in a variety of ways. This guy couldn’t abide by an order if his life depended on it… well, actually his life was depending on it. Doesn’t appear that his life will be too easy going forward because the judge sent him directly to jail. Get the details in Investment News. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091012/FREE/910129995/1094/INDaily01

Miami Vices

Miami insurance agent Jose Peris pleaded not guilty to stealing about $14 million. His alleged vices include submitting insurance contracts with fake policyholders. Stay tuned to see if this guy gets out of jail. Read the full Investment News story. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091012/FREE/910129992/1094/INDaily01

Life Savings Frittered Away

A 90-year old nursing home resident entrusted his life savings to former New York broker Sergio Del Toro. But in the end, the elderly investor and his family saw that his investments were far too risky and discovered that more than $500,000 was long gone. Del Toro not only defrauded his client, but also frittered away his career. The Financial Industry Regulatory Authority barred him from the securities industry for life. The full Financial Advisor article is here. http://www.fa-mag.com/fa-news/4580-broker-barred-for-defrauding-90-year-old-of-life-savings.html

A Century of Punishment

Mr. Richard Heartless…. uh, I mean… Harkless. Mr. Richard Harkless received a brutal sentence of 100 years in prison for his Ponzi scheme that caused his investors to lose $40 million. The judge was convinced that the 65-year-old southern Californian would do it again, given the chance – even though the crook admitted causing unimaginable grief and loss. See the Investment News story here. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091009/FREE/910099985/1094/INDaily01

Did Your Mother Teach You Nothing?!

It’s likely that the well-known NY socialite Brooke Astor attempted to teach her son sound financial lessons, but it clearly didn’t soak in. Not only did Anthony Marshall commit financial fraud, he robbed his own mother – to the tune of $200 million! A jury convicted him and now the 85-year-old faces up to 25 years in prison. And here’s the kicker: Marshall’s own son tipped off the authorities. Investment News has all the details here. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091008/FREE/910089984/1094/INDaily01

Good Use of Prison Cells

A Lansing, Michigan area judge brimmed with confidence at Jeffrey Sadlak’s sentencing recently. Judge Joyce Draganchuk proclaimed that a prison cell is a perfect fit for Mr. Sadlak following his conviction for defrauding investors. It’s good to hear such confidence in sentencing from the bench. Here’s more on the story from Investment News. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091007/FREE/910079993/1094/INDaily01

Cuban Back at SEC’s Center Court

Fleecing Central sweetheart, Mark Cuban is back in the SEC’s spotlight. A case against Cuban for insider trading was dismissed. But the SEC maintains its accusation that he illegally sold shares of stock. Stay tuned for another shot by the SEC in the court of law. More details at Investment News. http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091007/FREE/910079986/1094/INDaily01