PatrickPretty.com

Author: PatrickPretty.com

  • Ballroom Dancer Gets 18 Years In Financial Scheme; Wayne ‘Twinkle Toes’ Puff Case In New Jersey Combined Mortgage And Ponzi Fraud

    His case signaled that things were desperately out of control in the U.S. mortgage industry, and Wayne Puff was sentenced yesterday to 18 years in federal prison for swindling investors and banks in a massive mortgage and Ponzi scheme that operated between 1998 and 2005.

    Although Puff had been disciplined by regulators in New Jersey (2002) and Pennsylvania (2004) in a complex mortgage and securities scheme that featured unregistered offerings, the fraud continued. His New Jersey Affordable Homes empire, which had been propped up by fraudulent loan paperwork and real-estate appraisals that had been inflated by as much as 900 percent to create value where none existed, collapsed in 2005.

    Investors and banks lost tens of millions of dollars. The U.S. mortgage meltdown occurred two years later, owing to the types of schemes that fueled Puff’s New Jersey operation. Lenders found themselves holding worthless mortgages, and Wall Street found itself holding worthless bundles of securities.

    Puff, 61, enjoyed ballroom dancing. Commenting in the New York Times, a fleeced investor said, “We used to call him Twinkle Toes.”

    Investors were promised guaranteed annual returns of between 16 percent and 22 percent. “Money finders” — people who recruited investors into the scheme — were paid commissions of 4 percent. The purported business model was the buying, renovating and selling of real estate at a profit, but investigators discovered Puff was monumentally upside down because of skimming and institutional corruption.

    Among other things, the Puff case demonstrated the complexities that accompany Ponzi schemes and the enormous effort it takes to reverse-engineer an epic fraud. The SEC, for example, identified “at least 82 entities that are owned or controlled by, related to, associated or affiliated with, NJ Affordable and Puff,” according to court filings.

    Among the screaming advertising claims:

    “DOUBLE YOUR MONEY IN LESS THAN 5 YEARS.”

    “A FIRST MORTGAGE LIEN IS EXACTLY THE SAME COLLATERAL THAT A BANK GETS WHEN THEY LOAN YOU MONEY TO BUY A HOME. IT’S THE BEST, SAFEST COLLATERAL THERE IS. IF A BANK COULD DO ANY BETTER, THEY WOULD. BELIEVE THAT! IT’S THAT SIMPLE.”

    “A SAFETY NET OF 25% OR MORE BETWEEN THE APPRAISED MARKET VALUE AND THE FIRST MORTGAGE.”

    Appraisal values, however, were so grossly overstated that they almost were comedic, according to court filings. In one case, a property acquired for $60,000 was said to be worth $2,085,000; a property acquired for $7,500 and said to be worth $750,000; and a property acquired for $85,000 was said to be worth $3,900,000.

    In yet another nearly comedic example, a property acquired for the nominal sum of $1 was said to have an appraised value of $165,000, but NJ Affordable issued mortgages on the property totaling $261,068.03, according to court filings.

    Screen shot: From SEC complaint in Puff case.

    “Out of the $333 million in real properly sales that NJ Affordable recorded between January 1, 2004, and May 1, 2005, at least 90% ($30.4 million) was generated from sales to people closely connected to NJ Affordable, such as its investors, employees, insiders, affiliates, or nominees who had previously bought a property from NJ Affordable or one of its Affiliated Entities and transferred it to NJ Affordable Affiliated Entity,” the SEC said.

    “By selling to investors, insiders and nominees, NJ Affordable has generated ‘revenues’ while maintaining control over ‘sold’ properties,” the SEC said. “NJ Affordable has sold and resold the same property to different investors, and has also used a series of sales (or ‘flips’) to escalate a property’s sales price.”

  • Montana Broker Arrested In Alleged Ponzi; Authorites Say Arthur L. Heffelfinger Stole From 90-Year-Old Client With Dementia

    Arthur Leroy Heffelfinger has been arrested in Montana on a felony charge of exploitation of an older person amid allegations he raided the account of a woman in her 90s to sustain a Ponzi scheme he had been operating for years.

    Heffelfinger, 63, of East Helena, also was charged with a felony count under Montana state law of operating a pyramid promotion scheme and a felony count of theft. Officials said Heffelfinger stole at least $2.02 million from clients to fund a Ponzi scheme.

    The elderly woman, who died in October, was a patient in a nursing home. She suffered from “advanced dementia” and cognitive impairment, according to prosecutors.

    Monies for the elderly couple were entrusted to Heffelfinger beginning in 2001. The woman’s husband, who also was in his 90s, died in 2002, according to court records.

    Two days after Heffelfinger received the elderly couple’s initial investment of nearly $97,000 on March 12, 2001, prosecutors said, he started doling in out in Ponzi payments. Records suggest he set aside more than $36,000 of the opening deposit for his own use, and also caused “unnecessary tax consequences.”

    After the woman’s husband died, according to records, Heffelfinger continued to manage money for the woman. Subsequent funds entrusted to him also went to Ponzi payments. Records in the case suggest a tax-refund check for the woman in the amount of $28,776  received in June 2003 and entrusted to Heffelfinger immediately was used to make Ponzi payments and pay Hellelfinger’s bills.

    Here is what happened to a $28,776 tax refund, according to Montana prosecutors.

    In September 2009, the woman’s daughter reported that checks to her mother’s nursing home had bounced. Believing that her mother’s funds had been invested in a Real Estate Income Trust (REIT) through Heffelfinger — the local manager of KMS Financial Services — the woman became alarmed, fearing that her mother suddenly would have to go on Medicaid to pay for her care.

    A KMS official flew to Helena to shut down Heffelfinger’s office, according to court filings. A state investigation ensued, and the Ponzi scheme was exposed. Before long, investigators determined that the scheme dated back at least to 1998 and that at least 28 investors from at least eight Montana counties had been fleeced.

    Heffelfinger’s case will be prosecuted in Lewis and Clark County. The state already has named a special prosecutor.

  • Former Talk-Radio Host Gregg Rennie Pleads Guilty In Ponzi Scheme; Weizhen Tang Arrested At Toronto Airport

    Weizhen Tang: Arrested Jan. 13, 2010

    A Massachusetts man accused of targeting senior citizens and people of faith — and fleecing millions of dollars from them in a Ponzi scheme — has pleaded guilty.

    Meanwhile, Canadian-citizen and Ponzi-scheme suspect Weizhen Tang, the self-described  “Chinese Warren Buffet,” was arrested last night at Pearson International Airport in Toronto.

    Tang was taken into custody after returning to Canada from China. He was whisked to jail, and has a court appearance scheduled today. Toronto police asked for the public’s help in locating Tang earlier this month. Tang said he was aware a warrant had been issued for his arrest, and his attorney said Tang was returning to Canada to face the charges.

    In the Massachusetts case, Gregg T. Rennie pleaded guilty in U.S. District Court to 13 counts of securities fraud and one count of wire fraud. He potentially faces decades in prison and fines in the millions of dollars.

    “Financial crimes that prey on trusting investors, as alleged in this case, will not be tolerated,” said U.S. Attorney Carmen M. Ortiz. “The U.S. Attorney’s Office is dedicated to protecting investors from financial predators and will aggressively pursue those who exploit the trust of the investing public.”

    Rennie, 44, of Quincy, former was the host of the “Your Money” radio program. Christians were targeted in the scheme, which gathered at least $3.2 million, prosecutors said.

    “[H]e stole no less than $3.2 million from a number of victims, including an elderly gentleman whom Rennie had known since his childhood, retirees who invested their retirement savings with Rennie, and individuals who listened to Rennie’s radio show,” prosecutors said. “[His] victims also included a church congregation that had invested funds that the congregation had raised in anticipation of building a new church.”

    Rennie fleeced investors by telling them he handled “risk free federal housing certificates with guaranteed rates of return,” prosecutors said.

    He “told his victims that these investments involved government grants or loans for housing projects, or were otherwise investments in federally subsidized real estate developments,” prosecutors said.

    But Rennie “used the funds to pay for his own personal and business expenses as well as to make periodic payments to other victims,” prosecutors said. “To conceal his fraud, [he] showed some of his victims prospectuses for legitimate investment vehicles from respected investment companies. He further sent his victims bogus invoices which appeared to reflect their investments.”

    Rennie is at least the third talk-radio host recently implicated in a financial-fraud scheme. Christian radio host Pat Kiley of Minnesota was accused by the SEC and the CFTC of participating in a $190 million Ponzi scheme with Trevor Cook.

    In Beverly Hills, Calif., radio host John Farahi is accused by the SEC of targeting Iranian-Americans in a debentures-scheme pitched in Persian.

  • Records Suggest Cook/Kiley Firms Owned At Least 12 Large-Screen TVs And Beer-Dispensing Equipment

    In a case that already has featured assertions that alleged Minnesota Ponzi schemer Trevor Cook purchased a submarine on eBay to access his private island in Canada, the receiver in the case has filed papers that suggest Cook also had an affinity for large-screen TV sets.

    Receiver R.J. Zayed listed 10 TV sets with 50-inch screens and two sets with 42-inch screens as assets of the alleged Cook/Pat Kiley Ponzi scheme.

    Nine of the 50-inch sets were manufactured by Panasonic, and the model number suggests they are plasma TVs. One 50-inch set was manufactured by Akai, and the 42-inch sets were manufactured by Insignia.

    Also listed among the assets of the Cook/Kiley enterprises were at least 39 computer monitors with 22-inch screens and at least 19 with 19-inch or smaller screens, miscellaneous computer, office and sound equipment, three shredders, a “Beertender” dispenser, a “keg cooler/tap,” a craps table, a wine fridge and a karaoke machine, according to Zayed’s filings.

    Cook and Kiley — and their companies — were implicated by the SEC and the CFTC in an alleged $190 million Ponzi scheme. Zayed said Cook is not cooperating, and the SEC is seeking sanctions — including a contempt of court order that could jail him — to get him to cooperate.

    Both Cook and his wife have taken the 5th Amendment in the case.

    Among the allegations against Cook is that he purchased hard-to-trace gift cards after a federal judge froze assets in the case and is hiding assets in other ways. The Star Tribune of Minneapolis/St. Paul reported yesterday that a supermarket became concerned when Cook was observed shopping in the store, fearing he could be using frozen assets to pay for groceries.

    Cub Foods put Cook under video surveillance while he was inside and outside the store.

    Read Zayed’s listing of some of the assets in the Cook/Kiley case.

    Read the Star Tribune story/view the video.

  • FBI Arrested Ponzi Suspect Aboard Jet Preparing For Flight To ‘Overseas’ Destination Last Month; Tarakeswar Chaudhary Taken Off Emirates Airlines Plane

    Federal agents and airport police have arrested a man suspected of operating a Ponzi scheme and fleecing investors in a fraudulent Google stock offering, the FBI said.

    Tarakeswar “Tarak” Chaudhary, 49, of Tustin, Calif., was arrested last month at San Francisco International Airport after he boarded an Emirates Airlines flight bound for an “overseas” destination, the FBI said.

    U.S. Marshals now have returned Chaudhary from San Francisco to Santa Ana to face the charges.

    Emirates Airlines is wholly owned by the government of Dubai and flies to 100 cities in 62 countries across the Middle East, Africa, the Indian Subcontinent, Europe, the Far East, South America and North America, according to its website.

    “Chaudhary was removed from an Emirates Airlines flight bound overseas at the time of his arrest,” the FBI said.

    Chaudhary, 49, operated a company known as Transpacific Intertrade Inc. He was charged with mail fraud in U.S. District Court in Santa Ana, Calif., on Dec. 7.

    “[He] defrauded victims by promising to invest their money in initial public offerings and secondary share offerings by companies such as Google, Inc., when in fact, no such investments were made,” the FBI and Acting U.S. Attorney George S. Cardona said.

    At least three victims “are believed to have provided over $3 million to Chaudhary,” the FBI said.

    As part of the scheme, Chaudhary mailed forged statements on Morgan Stanley letterhead to at least one victim from whom Chaudhary obtained $1 million,” the FBI said. “The forged statement indicated that stock purchases had been made through a Morgan Stanley account, when in fact, no such account existed.

    In make investors feel safe, Chaudhary “lulled” them by fabricating “the identity of a financial advisor at Morgan Stanley,” the FBI said.

    “Chaudhary told at least one victim that his investment of $995,000 was gone and that he had also defrauded at least 20 people out of a total of $10 million or more,” the FBI said. “Chaudhary recently admitted to another victim that he was running a Ponzi scheme and that he had not invested any of the victims’ money.”

  • Do Ponzi Schemes Pose A Threat To National Security? New PP Poll Asks A Simple Question

    Our new poll asks a simple question: Do Ponzi Schemes Pose A Threat To National Security? You may vote only one time. Until voting closes, the poll also will be in the sidebar to the right.

    Feel free to argue your points in the Comments section of this post.

  • UPDATE: California Woman Arrested Last Week In Ponzi Case Charged Separately With Stealing From 90-Year-Old Widow And Using Money For Liposuction

    A woman jailed in California on Ponzi scheme charges has been charged in a separate case with stealing from a 90-year-old widow and using some of the money to have a liposuction procedure performed in Mexico.

    Redondo Beach police said they were investigating Mariana Montes for a separate crime when they discovered she was running a Ponzi scheme targeting Latin immigrants. The separate crime turned out to be financial abuse of the elderly.

    Police described it as a $682,000 fraud case in which it is alleged Montes conned the elderly woman into taking out home-equity loans, refinancing her home three times and making out blank checks that Montes cashed.

    The $900,000 home, which had been in the elderly woman’s family for 100 years, had no mortgage before Montes conned the woman, police said. The Daily Breeze newspaper of Torrance, Calif., reported that the woman was forced to sell the home to pay off the bank after Montes scammed her — and that Montes gave some of the money to friends and used some of it to have liposuction.

    Montes, 41, ran a fraudulent company known as “Fast Results Investments.” Redondo Beach police said she targeted Latin immigrants in a Ponzi scheme. The preliminary loss was estimated at $500,000 in the Ponzi case, but investigators said the figure could increase.

    “[She] used the investors’ money to purchase designer clothing, a new vehicle and to fund her daily activities,” police said.

    See our earlier story on Montes.

    See the Daily Breeze story about the alleged fleecing of the 90-year-old woman.

  • California Man Who Tried To Flee Country While His Ponzi Was Disintegrating Sentenced To Prison; John Anthony Miller Was Targeted In FBI/State Department Sting

    A California man who tried to adopt the identity of a deceased classmate from his school days to flee the United States while his Ponzi scheme was unraveling has been sentenced to 159 months in federal prison.

    The FBI and the State Department already were aware that John Anthony Miller’s scheme was falling apart when they targeted him in a sting in November 2008.

    Miller, who was convicted in 1998 of racketeering “predicated on mail fraud, wire fraud, and securities fraud offenses” was operating a Ponzi scheme a decade later through a company known as JAM Jr. Enterprises of Newport Beach, Calif., according to the criminal complaint in the case. Miller, 52, lived in San Clemente.

    Working with an informant, an FBI agent who also was an attorney and a former clerk for a judge on the U.S. Court of Appeals for the Third Circuit, set up a sting operation. Miller’s telephone calls with the informant were recorded as the scheme was collapsing.

    Miller sought the informant’s help in obtaining a passport to a country that did not have an extradition treaty with the United States, according to the complaint. Using a story that a family friend knew a corrupt passport official, the informant set up a meeting between Miller and the purportedly corrupt official, who was actually an undercover officer from the U.S. Department of State.

    <!–adsensestart–>Miller agreed to pay $20,000 for the passport, with $5,000 paid up front and the balance of $15,000 upon delivery of the passport. Miller paid the undercover officer $5,000 in cash that had been stuffed in an envelope. He then filled out a passport application that used the identity of his deceased classmate, according to the complaint.

    Worried about his ability to honor redemption requests in the Ponzi scheme, Miller told the informant that he had been “meditating” since 2007 over whether it was best to “hide out in the United States or abroad” and had contacted at least one other individual about obtaining a “fake identity,” according to the complaint.

    By October 2008, according to the complaint, Miller needed between $4 million and $5 million to meet redemption requests and did not have the money. He was worried about “tense” people who could bring him unwanted attention “quick” and wondered how long it would take for the FBI and the SEC to respond to complaints about him if “someone pull[s] the trigger.”

    Miller ultimately concluded it was best to flee the country. After using Ponzi proceeds to pay the undercover agent the $5,000 deposit  required for the bogus passport in November 2008, Miller was told it would take seven to 10 days for the documents to be prepared. He provided two photographs of himself, and used the name, Social Security number and date of birth of his deceased Catholic school classmate in the application.

    FBI agents who had been keeping Miller under surveillance arrested him while he was preparing to flee. He was charged with mail fraud (for bogus statements he sent to investors), bribery, passport fraud and identity fraud. He pleaded guilty last year.

    Investors lost more than $15 million in the scheme, which also involved a Miller company known as Forte Financial Partners.

    “Miller promised investors ‘guaranteed’ annual returns of between 10 percent and 18 percent per year, telling investors that their money would be invested in foreign currency trading, oil wells, real estate and other vehicles,” prosecutors said.

    Some investors raided their IRAs to invest with Miller, who promised better returns, prosecutors said.

  • Hedge-Fund Manager With ‘Great Tan’ And Porsche ‘Getaway Car’ Sentenced To Decade In Prison For Ponzi Scheme; Judge Scolds Bradley L. Ruderman At Sentencing

    After Bernard Madoff’s Ponzi scheme was exposed in December 2008, Beverly Hills hedge-fund manager Bradley L. Ruderman wrote a letter to clients assuring them them their money was safe and deploring Madoff’s “chicanery,” federal prosecutors in the Central District of California said.

    “[S]uch disgraceful practices will never happen under my watch,” Ruderman declared in the letter.

    Less than five months later — on April 28, 2009 — the SEC charged Ruderman, 46, with defrauding investors and lying about his Ruderman Capital Partners and Ruderman Capital Partners “A” hedge funds.

    Ruderman had  falsely told investors that Lowell Milken, chairman of the Milken Family Foundation and Michael Milken’s younger brother, and Larry Ellison, chief executive officer of Oracle Corp., invested with him, the SEC said.

    And “Ruderman falsely told investors that the hedge funds had earned positive returns from 15% to 60% per year and had over $800 million in assets,” the SEC said. “In reality, the hedge funds lost money and had less than $650,000 in assets.”

    Criminal charges followed in May 2009. In August 2009, Ruderman pleaded guilty to two counts of wire fraud, two counts of investment adviser fraud and one count of not filing a tax return for 2007, a year in which he earned $2 million.

    He was sentenced yesterday, and U.S. District Judge John F. Walter admonished Ruderman.

    “He stole from individuals he knew for many years, who cared about him, had invited him into their homes and shared meals with him, who had known him since he was a child,” Walter said.

    Ruderman family members and friends lost $25 million in the scheme, prosecutors said.

    When Ruderman wrote the letter assuring investors he was no Madoff and that their accounts were safe, the judge said, “he was stealing their money.”

    After hearing a statement from a victim that Ruderman was no different than a convenience-store thief or bank robber except he had “committed his crimes with manicured nails, a great tan, wearing an Armani suit and the getaway car was a Porsche that his victims all paid for,” Walter sentenced Ruderman to 121 months in federal prison.

    Given the recent “staggering increase” in investor-advisor frauds, Walter said, he wanted to “send a message that these crimes will result in significant prison sentences.”

    FBI agents who reverse-engineered the crime determined Ruderman had lost “$5.2 million of investor money in clandestine poker games held on a regular basis in a suite at a luxury Beverly Hills hotel.”

    Meanwhile, the investigation revealed that Ruderman, like Madoff, had sent investors bogus account statements. At the same time, it revealed he had spent had spent at least “$8.7 million of investor money on personal expenses, including $200,000 each summer for a rented beach house in Malibu, two Porsches, $53,930 on sporting events, $896,000 in credit card charges and $327,000 in cash expenditures.”

    Walter ordered Ruderman to pay nearly $26 million in restitution to victims. The FBI and IRS conducted the criminal probe.

  • SAN DIEGO COUNTY: Man On Probation For Ponzi Scheme Starts New Scheme, Prosecutors Say; Edmundo Rubi Targets Filipino Community For Second Time

    Four California residents have been indicted on charges they targeted the Filipino Community of Greater San Diego in a foreclosure-rescue investment scam prosecutors have dubbed the “Apocalypse Trust” and “Amerisian Trust” scheme.

    Edmundo Rubi, one of the defendants, was on federal probation for the infamous “Knights Express” Ponzi scheme that fleeced Filipino investors out of $24 million when he started the new scheme, said San Diego County District Attorney Bonnie M. Dumanis.

    “Rubi brazenly ignored the conditions of his parole and went right back to committing the same types of crimes,” said Dumanis.

    Planning for the new scheme reportedly got under way while Rubi was serving a 70-month-sentence in federal prison for the “Knights Express” Ponzi, which affected at least 425 investors.

    Rubi, 52, was on supervised release when arrested in the new scheme.

    Also indicted were Joseph Encarnacion, 59, Benjamin Hebron, 51, and Gloria Hebron, 53. The defendants were charged with 54 felony counts, including Conspiracy to Commit Securities Fraud, Securities Fraud, Sale of Unqualified Securities, Grand Theft, Perjury, Foreclosure Consultant Fraud and Rent Skimming.

    “Mr. Rubi’s recidivism into this type of crime demonstrates his disregard for engaging in legitimate business practices,” said Keith Slotter, FBI Special Agent-in-Charge.

    Investigators said 22 “Apocalypse Trust” and “Amerisian Trust” participants quit-claimed 34 properties into various fraudulent trusts, owned by Rubi and administered by Ben and Gloria Hebron.

    Instead of assisting homeowners in foreclosure, the defendants stole their money or did not apply money as advertised, according to the indictment. Rubi lied about his criminal history.

    “Rubi and Encarnacion recruited former victims of the ‘Knight Expresss’ Ponzi scheme” into the quit-claim scheme, prosecutors said. The terms of his probation prohibited him from “from having any contact with investors or financial accounts.”

    In the Knights Express scheme, investors were told they were investing in a “secret international trading program” in which Federal Reserve notes were purchased and sold at discounted rates, prosecutors said in 2003.

    In the “Apocalypse Trust” and “Amerisian Trust” scheme, investors were coerced into signing a “Non-Disclosure & Confidentiality Agreement,” according to the indictment.

  • New Jersey Woman Who Fleeced Unificationist Congregation In $15 Million Ponzi Scheme Gets 70 Months In Prison

    A New Jersey woman who told members of the Unification Church that they could turn $3,000 into $6,000 in a year by investing in her real-estate business has been sentenced to 70 months in federal prison.

    Marcia Sladich, 51, of Clifton, pleaded guilty to mail fraud in July, admitting to U.S. District Judge Katharine S. Hayden that “she did not make real estate investments, but used new investor money to make principal and interest payments to existing investors and to purchase real estate in Florida and Brazil in her name and in the names of her relatives,” prosecutors said.

    Some of Sladich’s victims, however, were disinclined to believe that Sladich had ill intent and advanced an explanation that she had been duped. (See link to “Record” near bottom of story.)

    Investigators said Sladich operated a Ponzi scheme between 2004 and 2007, collecting $15 million from investors and paying commissions to people who helped recruit others into the scheme.

    Although Sladich did buy real estate with some of the funds, she titled it in her name and the names of family members in the United States and Brazil. She also used investors’ money to pay her mortgage and credit-card bills.

    In a separate civil prosecution by the SEC, the agency outlined a series of possible tip-offs in Sladich’s offering materials that perhaps signaled investors that they were not doing business with a professional investment company.

    These awkward lines all appeared in the offering materials, according to the SEC:

    • [t]he agreement of booths (sic) parties convenants and agrees that the Shares will be to engage in a fund for of (sic) business this can generate from the investment.
    • a commission of the investment.
    • for a personal investment involved (sic) Real Estates (sic).
    • will be used for a personal investment involving Real State (sic).

    Sladich allegedly sent $400,000 to Brazil. “[A]ll of the property purchased was titled in the name of Sladich’s relatives, including her mother,” the SEC said.

    The scheme began to collapse in early 2007, and Sladich fended off investors by instructing an employee to lie and by encouraging clients to “re-invest” their monthly payouts instead of cashing them out. By July 2007, she changed the rules to forestall disaster, the SEC said.

    Sladich’s company — Kay Services LLC — upped the minimum investment in June 2007 from $3,000 to $12,000, and slashed the yearly payout from 100 percent to 50 percent, the SEC said. Recruiting commissions were eliminated.

    Even though Sladich knew the scheme was collapsing, she continued to accept money, including $100,000 from one investor and $50,000 from another in September 2007, according to the SEC.

    The scheme “finally collapsed” a month later. Investors then received a letter from an attorney that there would be no more payouts beyond principal “[a]s a result of unforeseen financial developments, including but not limited to volatility in real estate and other investment markets,” the SEC said.

    Sladich, though, knew she was operating a Ponzi scheme and that the purported real-estate business generated no revenue, the SEC said.

    “The October 2007 letter asked investors to execute an agreement, releasing the Defendants from liability in exchange for the return of their principal,” the SEC said. “Some of the investors executed the release but did not get a payment from the Defendants.”

    Criminal charges and a guilty plea followed, and Sladich’s sentencing this week set up an interesting dynamic in the court room, according to the Record newspaper.

    Now known as the Family Federation for World Peace and Unification, the Unification Church follows the teachings of the Rev. Sun Myung Moon.