Owner of Investment Firm Charged with Running Multi-Million-Dollar Ponzi Scheme April 1, 2010
Posted by jefhenninger in News.Tags: Ponzi scheme
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Donald Anthony Young was charged today by indictment with one count of mail fraud and one count of money laundering. The charges relate to Young’s execution of a Ponzi scheme in which his investors lost more than $25 million. Young operated an investment advisory business in Kennett Square, Pennsylvania, which was known by various names including Acorn Capital Management II LP, Acorn Capital Management LLC, and Acorn II LP. According to the indictment, Young solicited individuals to invest with him, claiming that he would invest their funds in the stock of large stable companies. Ultimately, Young obtained more than $95 million from his investors. Instead of investing all of these funds as promised, Young allegedly diverted more than $25 million of investor funds for his own use, purchasing, among other things, luxury homes for himself in Palm Beach, Florida; Coatesville, Pennsylvania; and Northeast Harbor, Maine.
“According to the indictment, this defendant helped himself to others’ fortunes, living a life of luxury, with little or no regard for the damage to our financial markets, our economy, and the reputation of the investment advisors who follow the rules.”
Because Young was allegedly stealing millions of dollars from his investors and using that money to pay his own personal and business expenses, he was unable to pay investors when they requested redemptions and he was forced to liquidate other investors’ funds to pay these redemptions. The indictment further alleges that when the United States Securities and Exchange Commission opened an investigation into Young’s business, Young attempted to obstruct the investigation by providing false and misleading information to the SEC and by refusing to provide the SEC documents, to which it was legally entitled.
According to the indictment, Young laundered the proceeds of his fraud by, among other things, stealing approximately $1.9 million of an investors’ funds and using these funds to purchase his luxury home in Palm Beach, Florida.
Annapolis Mortgage Broker Charged in Fraud Scheme February 2, 2010
Posted by jefhenninger in News.Tags: Ponzi scheme, wire fraud
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Mortgage broker David Wehrs, Sr. of Annapolis, Maryland, has been charged with wire fraud in connection with a scheme to defraud investors and financial institutions of approximately $2.3 million. According to the information and court documents, Wehrs owned Maryland Title and Escrow Company, Inc., located in Annapolis, and operated a small home remodeling company called Show-Me. From 2007 to October 2009, Wehrs allegedly induced individuals to invest money through Maryland Title into a purported FDIC-insured money market fund that Wehrs “guaranteed” would pay monthly interest payments of 10.85 percent. Instead of depositing the money into an “American Funds Fixed Rate Money Market” as promised, Wehrs allegedly deposited investor funds into one of two bank accounts he controlled in the name of his title company. Wehrs then wire transferred a large portion of these investor funds to a brokerage account in the name of his title company at Terra Nova Financial LLC located in Chicago, Illinois.
The Government also alleges that Wehrs then used the money he obtained to “day trade.” During the scheme, Wehrs is alleged to have conducted millions of dollars of stock trades per month. In addition to day trading, Wehrs allegedly used some of the investor funds to: pay “monthly interest” and “redemptions” to other investors; pay expenses of his other businesses, including Show-Me; make escrow payments for his title company; buy real estate and personal property; and pay other personal expenses.
The Government further alleges that when Wehrs had no money left in his personal bank accounts or day trading accounts to pay interest due to investors, he used $630,611 earmarked to pay lending institutions for mortgage payoffs from his escrow account at Maryland Title to pay investors, causing a loss of such amount to a title insurance company. He also allegedly used $100,000 from the Maryland Title escrow account that was earmarked as earnest money for the purchase of an individual’s home to pay interest to investors, causing a loss of $100,000 to the home buyer.
As a result of the scheme, Wehrs is alleged to have caused a total loss of $2,371,06 to investors and the title insurance company. The worst part for Wehrs is that it seems like he doesn’t have a ton of money to pay back to make this go away.
I made the NY Times! January 14, 2010
Posted by jefhenninger in Misc..Tags: Ponzi scheme
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Yesterday, I was interviewed by NY Times columnist Peter Applebome about a Ponzi schemes. His column was published today and you check out it here. Besides being interviewed, I had a great conversation with Peter. He’s got a great column that is published on Monday and Thursday. You can read his column from other days here. Based upon the traffic that it has sent to this blog in just a few hours, it is clearly a rather popular colum.
Bernard Madoff “arrest net” widens with more arrests November 13, 2009
Posted by whitecollarcrimenews in News.Tags: computer crime, Madoff, Ponzi scheme, Fraud
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Thought the Bernie Madoff saga was over? Think again. The Government will not pack up shop with Madoff’s plea and sentencing. They will continue to arrest and prosecute just about anyone who can be connected to Madoff’s ponzi scheme.
The latest arrests are for two former computer programmers for Bernard Madoff’s investment firm on charges they helped cover up his massive fraud for more than 15 years. Jerome O’Hara and George Perez are charged with conspiracy, falsifying books and records of a broker-dealer, and falsifying books and records of an investment adviser. The Securities and Exchange Commission has alleged that they provided technical support to produce false documents and trading records.
Of course, the Government will have to prove that these men shared Madoff’s intent which may be very difficult. However, the fact that these men are even associated with Madoff will make it very difficult for the defense. In my opinion, this case turns on whether or not these men are just associated with Madoff or if there is some actual evidence such as cooperating witnesses, documents or emails that show the conspiracy.
The amount they were paid may impact the case as well since if they were over paid, then the extra compensation will make it more likely that they were in on it. If their salary was normal, then it will be less likely that they risked criminal prosecution with no “skin in the game”.
Story is here.
Millstone man gets off easy for ponzi scheme November 9, 2009
Posted by jefhenninger in News.Tags: Ponzi scheme
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I’d like to know more about this case. Michael D’Angelo was sentenced to three years in prison 10 months after pleading guilty to a second-degree charge of theft by deception in connection with securities fraud committed by his company, CMR Mngt. Group, LLC. He has agreed to pay a total of $670,177 in restitution and penalties and his ability to do so probably got him the deal.
He was charged by the state Divison of Criminal Justice in March 2008. An investigation revealed he convinced 26 investors to contribute more than $3.2 million to his company over the course of two years beginning in January 2004. Instead of making good on promises of 5 percent monthly returns generated by foreign currency trading and bank note trading, he used the new investments to pay off the original fund members. Like Madoff and all the others, this scheme works as long as you bring in new people. When the economy tanks and everyone wants their money, you get found out pretty quickly.
He also diverted large sums of money into the bank account of his wife, Diana D’Angelo and then used the funds to cover personal expenses that included their Monmouth County home and payments for high-end cars. Again, this is a classic example of what separates a bad investor and a crooked one. A bad investor suffers with everyone, a crooked one lives the high life.
Michael will be out of prison in about 6 to 9 months. After his home and other assets are sold, he’ll probably still have a nice chunk of change to pay back to his victims. The State could have probably hammered him with more charges but it seems like he had a good attorney that worked this out for him.
Story is here.
U.S. Commodity Futures Trading Commission inquiry eventually leads to ponzi scheme indictment August 12, 2009
Posted by whitecollarcrimenews in News.Tags: Fraud, mail fraud, Ponzi scheme, wire fraud
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This is a very interesting case because an investigation into Paul Robert Karr’s activity started in 2004 but he was just indicted now. I’d really like to know what took so long here. How does it take 5 years to put this together? Hopefully Karr used his time wisely and has prepared for his defense over the years.
The only good thing about all of these ponzi schemes at this point is that a defense attorney can keep track of all of the sentences that are starting to go down so that they can advise their client accordingly. Of course, the bad thing though is taking these cases to trial is very difficult for many reasons, the least of which is the public’s attitude on these cases.
Jeffrey H. Sloman, Acting United States Attorney for the Southern District of Florida, and Michael J. Folmar, Acting Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announced today that Paul Robert Karr, f/k/a Paolo Roberto Correa (“Karr”), a North Miami Beach resident, was arrested earlier today on mail and wire fraud charges arising from an investment fraud scheme in which more than 100 investors lost approximately $4,000,000. Karr is currently being held without bond. A pre-trial detention hearing is scheduled for Friday, August 14, 2009 at 10:00 AM, before the duty Magistrate Judge.
As alleged in the Indictment, from January 2002 through November 2004, Karr defrauded investors by soliciting investments for the purported purpose of trading foreign currencies in the international foreign exchange market. Karr caused investors to believe that, based on his alleged extensive experience trading foreign currencies, he would trade foreign currencies on the investors’ behalf in return for a share of the profits generated by his trading activities. Investors were led to believe that Karr was generating positive monthly returns trading foreign currencies each and every month during the course of the scheme. In fact, during most of the scheme’s existence, Karr did not even attempt to trade foreign currencies, and, when he did attempt to do so, he lost significant amounts of investors’ money.
As the Indictment alleges, Karr used most of the investors’ money for his own personal benefit and to make payments in Ponzi scheme fashion to investors who occasionally sought to redeem some of the money that they had invested with Karr and his various corporate entities. In October/November 2004, the scheme collapsed after Karr received inquiries from the U.S. Commodity Futures Trading Commission (“CFTC”) concerning his activities in the international foreign exchange market.
Mr. Sloman commended the investigative efforts of the FBI and the assistance of the staff of the CFTC’s Chicago Office. The criminal case is being prosecuted by Assistant U.S. Attorney Harold E. Schimkat.
Ponzi schemes continue to roll up July 30, 2009
Posted by whitecollarcrimenews in News.Tags: Attorney, Crime, Fraud, Law, Lawyer, Madoff, New Jersey, News, Ponzi scheme
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Some of the ponzi schemes that surfaced over the past year are starting to plea out. The latest includes Marcia Sladich, the former operator of a Clifton-based real estate investment program. She admitted that she fraudulently stole more than $15 million from hundreds of investors. She pleaded guilty on Thursday in federal court to a one-count information charging her with mail fraud. Under federal sentencing guidelines, she faces up to 78 months in prison but of course, the guidelines are no longer mandatory.
After the circus that was the Madoff case, I would want a few more of these cases to shake out first before tempting fate. Conventional wisdom has traditionally been that a good attorney can shave years off the sentencing guidelines in a white collar crime case. My firm has made that a reality. Of course, post-Madoff, some judges might want to send an example especially when the victims are in the hundreds. A six and a half year sentence in a $15 million case is pretty good deal so we’ll have to see what the judge hands down.
Story is here.
2 park employees arrested as crackdown begins in Union County May 19, 2009
Posted by whitecollarcrimenews in News.Tags: Crime, forgery, Fraud, Law, New Jersey, News, official misconduct, Ponzi scheme, theft, theft by deception
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Melissa Kolbeck, a clerk for the Union County Parks Department is accused of stealing between $15,000 and $20,000 in funds paid to the county for permits. Union County Park maintenance worker Brian Hughes is charged with forgery and stealing more than $35,000 from the parks workers’ union, of which he is president, authorities said. Authorities indicate that both incidents are unrelated.
Yesterday, Union County announced the creation of a new Economic Crime/Inspection Bureau, which will be in charge of investigating matters like credit card fraud, Ponzi schemes and identity theft and referring them to the prosecutor’s office. As a result, white collar crime is going to spike in Union County. As always, anyone contacted by this agency or any other law enforcement agency should call an attorney right away.
Story is here.
New Jersey man faces State charges for alleged ponzi scheme March 20, 2009
Posted by whitecollarcrimenews in News.Tags: Crime, Fraud, Law, New Jersey, News, Ponzi scheme, theft by deception
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Gary Klein of Colts Neck, New Jersey and the founder of REI Group Inc, has been indicted on one count of theft by deception. The State alleges that his victims, possibly numbering 130, may have lost a total of $8,000,000. Unlike all the other ponzi schemes that came to light after Madoff, this case has actually been around since 2006. It just took a few years for the indictment to come down.
Luckily for Klein, the State charges are nothing compared to Federal charges that Madoff and others are facing. Regardless of what he gets, (the range is about 5 to 7, although he could get up to 10) his actual time behind bars will likely be less than a year. Not bad huh?
The politics of a plea; what did Madoff do? March 10, 2009
Posted by whitecollarcrimenews in News.Tags: Crime, Fraud, Law, Madoff, News, Ponzi scheme, Scam, theft
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It looks like Madoff (Bernard L. Madoff Investment Securities or BLMIS), is going to plea out and as a result, die in prison. He will also have to pay back a ton of money. However, the Government claims that there is no plea agreement. I can’t buy this. I see no reason why you would give up your right to stall in an effort to delay going to prison to die. I see no reason why your attorneys would work so hard for months only to just throw in the towel so early. Why even get a good attorney? What are you even paying them to do.
Here’s what this boils down to. He is going to take the hit and give back money in exchange for something. My guess is that this something, this bargain, involves his family. However, the Government wants to look like the white knight here with no blood on their hands. It is all politics. They say there was no plea agreement and maybe they are right in a technical sense. However, I’m sure there is an agreement that we don’t know about that makes Madoff decide to avoid the trial of the decade (or even century)and plea out so early.
When the media feeds you this garbage, don’t buy it. Article is here.
