Ponzi scheme

The U.S. Commodity Futures Trading Commission (“CFTC”) has charged Patrick Rakotonanahary and Cyber Market Group LLC with operating a multi-million dollar foreign currency (“forex”) Ponzi scheme in Hawaii, and elsewhere in the United States.

The Securities and Exchange Commission has obtained an emergency court order to shut down an alleged Ponzi scheme targeting retirees in California and Illinois who are invited to estate planning seminars and later coaxed to buy promissory notes for purported Turkish investments. 

A Los Angeles-based investment advisory firm and its principal were running a $14.7 million Ponzi scheme targeting retired Los Angeles bus drivers, the Securities and Exchange Commission alleged today. The SEC contended that Thomas L. Mitchell and his firm Mitchell, Porter & Williams, Inc.

Ending a high profile action in one of the biggest Ponzi schemes in recent years, creditors of disgraced attorney Marc Dreier have voluntarily dismissed with prejudice a lawsuit they filed against his ex-wife, trying to hold her liable for some of his fraudulent behavior. 

Gaston and Teresita Cantens, the prominent Miami-based founders and co-owners of the real estate development company Royal West Properties Inc., have been charged with fraud for conducting a $135 million Ponzi scheme with real estate investments from hundreds of elderly Cuban-American investors living in South Florida. 

Florida hedge fund manager Arthur Nadel, who scooted around the country last winter after the government got wind of his fraud and who told his wife to ‘sell the Subaru if you need money,” pleaded guilty to 15 counts of securities fraud today for defrauding customers of millions of dollars in a massive Ponzi scheme.

A N.Y. state judge has denied a motion by Ezra Merkin to dismiss a complaint filed against him by N.Y. Attorney General Andrew Cuomo stemming from the Bernard Madoff Ponzi scheme. The complaint alleges that Merkin and his investment management company made misrepresentations and omissions to investors, including many charities, who entrusted him with their money.

An under-appreciated problem of substantial financial frauds is how they pit their victims against one another. Typically, the funds remaining after the fraud is uncovered are insufficient to make whole all of the numerous victims and creditors, who are left to squabble over who should get what.

Another lawyer has pleaded guilty to operating a massive Ponzi scheme. His name: Scott Rothstein. The size of this financial fraud, according to the government: $1.2 billion. 

An analysis of Ponzi schemes by the Associated Press reveals four times as many such scams this year as last (with Madoff included in 2008), and $16.5 billion in losses. The AP says 150 Ponzi schemes fell apart this year – so many that the AP refers to the U.S. as “Ponzi Nation.”