Neal Goyal, the owner of Blue Horizon Asset Management LLC and Caldera Advisors LLC, has been accused by the Securities and Exchange Commission of defrauding at least 35 investors out of more than $11.4 million in a Ponzi scheme. The suit was filed on Wednesday in Northern District Court and alleges that Goyal never invested the majority of the money he received from investors and instead using it on personal spending, including funding his wife’s baby boutique. The limited trading that Goyal did perform resulted in significant losses.
According to the suit, Goyal raised over $7 million from investors through offering and selling limited partnerships in three Blue Horizon funds and a Caldera Equity Fund by making false representations about the intended use of the funds.
Goyal, 33, is accused of using what is known as a “long-short” trading strategy, meaning that the funds would purchase certain equity securities while selling short other equity securities. The suit alleges that Goyal also represented to investors that the funds were consistently outperforming the stock market and that he created and sent investors fictitious account statements for the funds they invested in. When investors attempted to cash out the fund, the SEC claims that Goyal made payments to investors based on the inflated amounts represented in the account statement.
The SEC has requested a jury trial, for Goyal to return the money to investors, and appropriate penalties as decided by the court.
Garfield M. Taylor, 55, of Rockville, has pleaded guilty to securities fraud in connection to a $25 million Ponzi scheme that spanned from 2006 to 2010. Under federal sentencing guidelines, Taylor could face a sentence ranging from 12 years and seven months to 15 years and 8 months in prison. As part of the plea agreement, Taylor must also pay restitution to the victims and fines totally nearly $175,000.
According to evidence, Taylor convinced the victims of his scheme to invest with him by promising substantial returns on their investment. Taylor told investors that he used a sophisticated securities trading strategy that protected against losses and claimed he had a proven track record of using this strategy effectively. However, he never used this investing strategy and either lost money, or made minimal profits far below what was needed to pay the amounts he owed.
Federal court records show a list of 10 investors who collectively lost $25.1 million in the scheme. Included in the list of victims was a family who sought to generate enough money to send an autistic child to private school.
United States District Court Judge Richard W. Roberts scheduled Taylor’s sentencing hearing for July 15, 2014.
Agents from the Federal Bureau of Investigation’s Washington Field Office and the District of Columbia Department of Insurance, Securities, and Banking handed the investigation this case.
Scott Anderson Hall, 49, pleaded guilty on Friday in a federal court to running a Ponzi scheme that defrauded more than 50 people out of $5 million. Hall faces up to 80 years in prison, a fine of over $1 million, and he must pay restitution to the victims involved in all of the 34 counts of the federal grand indictment.
The majority of the victims in this Ponzi scheme were Duval County School Board members who invested money with Hall from their Deferred Retirement Option Program. Hall promised them large returns and instead used the money to buy commercial property, luxury cars, and other personal items.
The only victim to appear in court was Juana Pollock. Investigators say that Pollock, who was a hospital worker, lost more than $200,000. A discrepancy in the wording of the count involving Pollock caused it to be dropped at the last minute. Authorities believe she remains a victim and is entitled to restitution. Pollock said Hall’s scheme nearly ruined her financial and made it difficult to continue paying her mortgage and the medical bills for her daughter’s fight against Crohn’s disease.
Scott Anderson Hall also pleaded guilty to two counts of mail fraud, one count of wire fraud, and one count of money laundering. The other counts were dropped. He remains free pending a sentencing hearing which has yet to be scheduled.
This case was investigated by the Federal Bureau of Investigation and the Florida Department of Financial Services.
A federal indictment has been returned accusing Marcin Malarz, 39, and Arthur Lin, 48, of operating a Ponzi scheme. The two men are accused of fraudulently raising over $9 million from 25 real estate investors and using the funds for their own personal use and to pay off earlier investors.
According to the indictment, Lin, of Palatine, was an officer of Malarz Equity Investments LLC, which bought various apartment buildings and converted the units into condominiums. Between November 2005 and April 2010, Lin recruited clients to invest in Malarz Equity. In some instances, the clients were encouraged to obtain home equity loans or liquidate their brokerage investments to obtain the capital used to make the investments. Lin and Malarz are also accused of making false representations about how the funds would be used, the solvency of the business, and Malarz’s ability to personally guarantee the investments.
Malarz allegedly spent $2 million of the funds on personal expenses including a new Mercedes. The remaining investor funds were paid directly to Lin’s wife.
The indictment is seeking $5.5 million, which is the estimated total loss to investors, and Lin’s homes in Palatine and Barrington. His arraignment date has not been determined at this time.
According to the Justice Department, Malarz is a fugitive and believed to be currently living in Poland.
David R. Wulf, 60, was convicted on 18 counts of fraud for his involvement in a Ponzi scheme that defrauded customers of the National Prearranged Services out of over $600 million. The charges included bank fraud, wire fraud, wire fraud affecting a financial institution, and conspiracy. Wulf’s case was one of the largest frauds ever prosecuted at the federal courthouse in St Louis. The documents filed by prosecutors during this thirteen day trial included a 213 page exhibit list.
Wulf, who was an investment advisor to National Prearranged Services Inc, was responsible for protecting the trusts’ assets and investing. While holding this position, he authorized the use of trust funds to pay unrelated debts of companies affiliated with NPS which enriched his co-defendants. The Ponzi scheme spanned 12 states and impacted thousands of customers.
Initially six former officials were accused of defrauding customers of the company including the principals of NPS, Doug Cassity and Brent Cassity. In the weeks leading up to the trial, all of the defendants pleaded guilty except for Wulf.
David Wulf’s sentencing has been scheduled for November 7, 2013. Each count of bank fraud, conspiracy, and wire fraud affecting a financial institution, carries a penalty of up to 30 years in prison. The wire fraud charges each carry a maximum sentence of 20 years.
Two Western Michigan men who pleaded guilty to a multi-million dollar investment scam were sentenced on Friday in Ottawa County Circuit Court. Jeffrey Ripley, 60, and Danny Lee Vanliere, 61, were accused in a Ponzi scheme that convinced over 140 investors that they could get millions of dollars from foreign banks by raising enough money to pay taxes and other charges. Victims lost anywhere between $3,000 and $600,000 each in a scheme that totaled over $9,000,000.
Michigan Attorney General Bill Schuette alleged that the two men “preyed on elderly victims” and convinced them to cash in certificates of deposit and other investments to invest in API Worldwide Holdings. Schuette said Ripley and Vanliere tracked maturation dates of CDs before contacting the owners to persuade them into investments with API once the CDs matured.
Ripley and Vanliere were each sentenced to a range of six to twenty years in prison. Vanliere was ordered to pay $3.1 million in restitution and Ripley was ordered to pay $5.3 million. API Worldwide holdings was ordered to pay $7.6 million in restitution. After factoring in the time already served, the two men will both become eligible for parole after about five years.
In court both men apologized while Jeffrey Ripley took full responsibility for the Ponzi Scheme. Vanliere believes he was conned along with the victims.
After announcing the high profile arrest of Birmingham resident Spero Vourliotis earlier this summer, Joseph P. Borg, Director of the Alabama Securities Commission (ASC), took to the airwaves to announce that his office is currently investigating at least a “half-dozen” Ponzi schemes within Alabama’s borders. Vourliotis was arrested in Jefferson County and charged with one count each of Sale of Unregistered Securities, Acting as an Unregistered Investment Advisor, and Securities Fraud. While these were the official charges, it is believed that the factual allegations revolve around Vourliotis’ involvement in a Ponzi scheme alleged to have cost investors millions of dollars.
Borg explained that there has been an increase in investigations due to losses by investors desperate to make a quick dollar due to the sagging economy.
These investigations generally result from complaints from investors who have lost money. Unfortunately, not every investment is successful. There can be a fine line between an investment professional who loses an investor’s money through a legitimate investment that just didn’t pan out, and someone who sets out to “rob peter to pay paul” and enrich themselves in the process.
As Ponzi defense attorneys we have represented honest, hardworking people who have been investigated for the sale of unregistered securities in Ponzi schemes. We work to show the authorities that the losses, while unfortunate, are not the result of criminal activity. While those that lose investment capital often feel victimized, that generally is not the case.
With the increase in investigations, there seems to be an increase in the penalties sought for those convicted on Ponzi allegations. So if you are being investigated for sale of unregistered securities, acting as an unregistered investment advisor, securities fraud, or other Ponzi related crime, act quickly to protect yourself. Contact our dedicated White-Collar attorneys at 205-502-2000 to represent you today.
On Decemer 28, 2012, a former St. Louis attorney and bishop, Martin Sigillito was sentenced to 40 years in federal prison after a Federal Jury convicted him in April 2012 of his role in the British Lending Program Ponzi scheme. While the scheme was described as a Ponzi scheme, Sigillito’s actual federal charges included criminal conspiracy, criminal wire fraud, criminal mail fraud, and money laundering.
The British Lending Program (BLP) was a Ponzi scheme in which private individual lenders were convinced their monies were being transferred to England to fund profitable real estate transactions with high interest returns. However, instead of lender money being sent overseas for real estate development, Sigillito placed the lender’s money in his attorney trust account in the United States. This money was rarely, if ever, used for the purpose for which is was intended, but rather used by Sigillito and his Co-Defendant, James Scott Brown for their personal expenses.
When lender’s interest payments became due, or if they asked to withdraw their money from the British Lending Program, the money to repay them did not come from profitable real estate business as represented by the Defendatns, but instead came from money lent by others, in classic Ponzi scheme manner.
It is reported that Sigillito and Smith each profited in excess of $6.1 million on this Ponzi scheme while over $52 million in loan funds were obtained by the Bristish Loan Program. Only $27 million was used to repay interest and principal to those individual lenders that were defrauded. Sigillito was also ordered to pay $30 Million in restitution as the actual out of pocket loss to the victim’s although such a payment is unlikely given his lengthy federal prison sentence. The British Loan Program is reported to have had no money left as of 2010 when the scheme came to a close.
In contrast to Sigillito’s 40 year sentence, Brown, Sigillito’s Co-defendant was sentenced to three years in federal prison after pleading guilty and agreeing to cooperate with authorities in the fall of 2012.
Today when anyone hears “Ponzi scheme” they think Bernie Madoff. And for good reason, too. Madoff is responsible for the biggest Ponzi scheme in history and had claimed that he worked alone to create the ill-fated ‘business plan’ that is estimated to have caused losses of around $17.3 billion.
Some of the charges that were brought against Madoff in 2008 included securities fraud, wire fraud, mail fraud, money laundering, perjury, theft from employee benefit plans and making false filings with the SEC. March 12, 2009, Madoff pleaded guilty to 11 federal felonies. and was sentenced to 150 years in federal prison on June 29, 2009.
Although Madoff still claims he acted alone, eight people have pled guilty to some degree of involvement in unethical practices involving Madoff and his businesses, including:
- David G. Friehling pled guilty to charges of securities fraud, investment adviser fraud and filing false audit reports with the SEC on November 3, 2009.
- Peter Madoff, Bernie’s brother, although denying he knew of the actual scheme itself, pled guilty to numerous charges, including failing to pay taxes on millions of dollars of income, submitting false filings to securities regulators and putting non-working family members on the payroll.
- Frank DiPascali pled guilty to 10 counts including conspiracy, investment advisory fraud, mail fraud, perjury and international money laundering on August 11, 2009.
- Eric Lipkin pleaded guilty to six criminal counts including falsifying documents, putting non-working people on the payroll in August 2011.
Now Irvin Lipkin, Eric Lipkin’s father, will soon be added to that list as he is expected to plead guilty to charges of falsifying documents, falsely paying people for 401(k) and retirement benefits and conspiracy to commit securities fraud. The elder Lipkin started working for Bernie Madoff in 1964 and was still paid by Madoff for many years even after retiring in 1999.
In 1998, Lipkin referred to Madoff as “the brother I never had,” a testament to how close the two had been, both professionally and otherwise. Lipkin could get jail time up to 10 years for his involvements in the Madoff mess.