U.S. Commodity Futures Trading Commission inquiry eventually leads to ponzi scheme indictment August 12, 2009
Posted by tsclaw2209 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 tsclaw2209 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 tsclaw2209 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 tsclaw2209 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 tsclaw2209 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.
Does Allen Stanford have enough money to bankroll a defense? February 19, 2009
Posted by tsclaw2209 in News.Tags: Allen Stanford, Crime, Fraud, Law, Madoff, Ponzi scheme
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Unless you live under a rock, you have probably heard of Allen Stanford by now. He is accused, but not charged criminally yet, with billions of dollars in fraud. While still not at the level of Madoff, his case might be more complex due the reach of his bank. As big as the Madoff story is, it is more of a New York story although his investors were spread out all over the place. Stanford’s case reaches numerous countries and as a result, it could much more complex that Madoff’s case.
Just as an example of what is going on now, Mexico’s banking regulator is investigating a local Stanford bank for possible violation of banking laws. While this may not yet involve Stanford directly, it probably will soon. This is a world wide situation that is going to get worse.
Stanford is going to need huge team of attorneys to deal with all of this and his company will need their own attorneys. These attorneys are going to have to dedicate just about all of their time to this case. Of course, that is incredibly expensive especially if you have to get teams of lawyers in different countries to deal with the issues that will come up in each country. It is going to be incredibly tough to bankroll all of this and then eventually bankroll a defense in the criminal case.
If I am running the defense team, I am making sure the defense in the civil case is handled so that the defense for the criminal charges that will be filed is started. I would also make sure that resources are not wasted but used carefully because money will be running out eventually. Everything has to be geared towards the criminal defense but you don’t just want to roll over on the civil case either.
It should be interesting to see just when he will be arrested. The public may force the Government to arrest him earlier than they would like to. I say that because Stanford was found in Virginia a few hours ago if you didn’t see that breaking news yet. He was not in Antigua or some other country as some have speculated.
Story about the Mexico investigation is here.
Female financial planner arrested for alleged ponzi February 3, 2009
Posted by tsclaw2209 in News.Tags: Crime, Fraud, Law, Madoff, mail fraud, News, Ponzi scheme
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Judith Zabalaoui’s case may seem like every other ponzi scheme that has made the news over the past few months. However, the fact that she is female and there are no males involved that she was working for makes her case very unique. Unfortunately for her, I doubt this will really help her out here.
Like many of the other cases out there, the first sign of trouble involved a law suit. She is also 71 which, like some of the other cases, make plea deals rather difficult to work out since 10 years could be a life sentence. She is alleged to have stolen over $3 million from 1993 to 2007.
Another interesting aspect of her case is that the evidence against her seems to be incredibly strong. At least Madoff and others had companies. Prosecutors allege that her companies were fake and she even crafted fake letters between herself and fake employees! That is so incredible that I would want to have her head examined. While mental health issues may not prevent a conviction, it can be used in mitigation. Most criminals take advantage of her situation but for an older female to go to this length to pull off a scam like this is rather unique.
Story is here.
Ponzi scheme hits Long Island, New York January 26, 2009
Posted by tsclaw2209 in News.Tags: Crime, Fraud, Law, Madoff, mail fraud, News, Ponzi scheme
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This is really starting to get out of hand. Arrests for Ponzi schemes are just exploding in the past few weeks. It is actually getting a little boring, at least for me as it is an old scam and not a very creative one. Nevertheless, I’ll continue to blog about the more interesting stories and since I’m in the NY media market, I feel compelled to discuss this one.
Authorities allege that Nicholas Cosmo, founder of Agape World Inc in Hauppauge. New York stole over $380 million from investors by using a Ponzi scheme. He has a big problem as he is a convicted felon.
In 1997, Cosmo was working as a stockbroker at Continental Broker-Dealer Corp. where he was accused of misappropriating funds. He pleaded guilty to a federal charge in 1999 and was sentenced to serve 21 months in prison. Not only will this increase his exposure for sentencing but the Government may be able to use this prior conviction against him in what is known as 404(b) evidence. As if his attorneys didn’t have it hard enough huh?
I’m sure there will be many reasons why it will be difficult for his attorneys to find legitmate excuses for his actions. Besides his prior conviction, another one will be that he said Agape started in 1999 even though he didn’t get out of prison until 2000.
Story is here.
Yet even more arrests for Ponzi schemes January 24, 2009
Posted by tsclaw2209 in News.Tags: Crime, Fraud, Law, mail fraud, News, Ponzi scheme, theft
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This is getting pretty crazy huh? The media made it seem like Madoff invented the Ponzi scheme. Now, there are too many arrests in a day to cover. I’m sure there are plenty others to follow.
Many of these cases begin with a civil suit. I’m concerned that the attorneys working these civil suits are not skilled in handling white collar crime cases. Otherwise, they will be able to see the criminal case long before the arrest and as a result, they can use the civil case to start building a defense. Discovery in a civil case is more or less wide open whereas a Federal criminal case is much more limited.
However, this works both ways. So, the client can be deposed whereas in a criminal case, they have the right to remain silent. I believe that this scares many attorneys into throwing in the towel when it comes to the civil case. While this would normally make sense, the chances of winning a Federal criminal case is remote if the client is indicted. Thus, if the attorney can develop some good evidence at the civil case, they could put some doubt in the minds of the US Attorney’s office before the client is even arrested. Due to the way they pick and choose cases (which accounts for the high conviction rate), they may never arrest the client in the first place. We have done this with many Federal and State cases. This saves our clients’ reputation not to mention a substantial amount of legal fees.
Two of the more recent Ponzi scheme arrests are:
1. Vander Tuig, Jonathan Carman, Mark Sostak, Soren Svendsen, Scott Yard and Robert Waldman have been charged with grand theft and securities fraud. All six men were affiliated with the Carolina Development company and were alleged to have defrauded over 1000 victims out of a total of $52 million. The alleged scam was to promise big returns to clients investing in luxary property next to golf courses in California. Like many of these cases, this alleged fraud came to light during a 2006 SEC investigation which resulted in a 2007 judgment. Story is here.
2. Frank Castaldi is alleged to have stolen tens of millions of dollars from about 200 to 300 clients. Since 1985, he allegedly promised investors returns of 10 percent to 15 percent on six-month promissory notes. Unlike the six men in the other story, Castaldi is not locked up with a multi-million dollar bail. Why? Because he is cooperating. That’s the real interesting part of this story. His attorney is obviously doing a good job for him.
He owns several businesses and thus, has several business partners. Anyone connected to this guy is in big trouble and needs a good attorney ASAP because the more people he brings in, the better of a deal he will get.
The story is here.
Joseph Forte, yet another alleged Ponzi scheme January 20, 2009
Posted by tsclaw2209 in News.Tags: Crime, Fraud, Law, Madoff, News, Ponzi scheme
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Another day, another Ponzi scheme. Is this getting boring yet? I would really like to see some of these cases get litigated but it’ll probably never happened.
Anyway, this latest allegation involves Joseph Forte, a Philadelphia based fund manager. He is alleged to have stolen $50 million from 80 investors over 10 years. He has two big problems that others like Madoff and Art Nadel don’t have. One is his age. At only 53, a lengthy prison sentence will actually mean something to him. With an older defendant, it is hard to scare them with a long prison sentence since they will likely die in prison if it is 5 years or 20.
His other problem is that he admitted to the scam. I can understand that average person not understanding how the police work, but how does this guy admit guilt here? He must have a team of attorneys working for him. How did they ok that? I’d really like to know more as that makes no sense at all.
Story is here.
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