APOLOGISTS INTERRUPTED: Two Court Rulings Show That HYIP Operators, Players Setting Stage For Painful Downfalls, Foreclosures; Woman Loses Home While New Mom Loses Everything

The Rivas/Morgan Bankruptcy Case

The Rivas/Morgan bankruptcy case in Tennessee is just plain sad. Regardless, it serves as an eye-opener for reckless promoters of HYIP schemes and destroys one of the key myths of the HYIP Ponzi world: that no Ponzi scheme exists if people are being paid and that the payments themselves are evidence of solvency. Next time you hear someone say a Ponzi or pyarmid scheme could not possibly be occurring because people are being paid, it will serve you well to remember the Rivas/Morgan case.

Rivas hatched a Forex HYIP investment-fraud scheme in the opening days of 2007. The scheme promised annual returns of up to 96 percent. Pitchmen were called “equity agents,” and the FBI said Rivas “used proceeds of the fraud to promote the scheme by giving gifts and bonuses to some of his investors to encourage them to recruit others.”

Although the Rivas scheme was a fraud from the start, it had morphed into an out-of-control Ponzi scheme by March 2007 — in the grand scheme of things, just days after getting started. The bankruptcy trustee proved Rivas’ so-called “Forex Project” business was insolvent by April 2007 and had become catastrophically insolvent over the next 13 months. The insolvency deepened from $259,898 at the end of April 2007 to $26,935,800 at the end of May 2008.

Were people getting paid? You betcha.

Here are some of the key findings by U.S. Bankruptcy Judge John C. Cook:

“The evidence presented at trial established that, as early as March 2007 and lasting until May 2008, the debtor, doing business as the Forex Project, operated a huge Ponzi scheme.”

Cook continued:

“In short, the proof was abundant and clear that the debtor was insolvent from April 2007 to the end of May 2008.”

Here is where a profound sadness sets in. Morgan, according to records, met Rivas while she was married to her husband in 2006. Rivas invited the couple to attend “his course on trading in the foreign currency exchange market.”

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