PatrickPretty.com

Tag: Edward May

  • SENIOR FRAUD CAVALCADE CONTINUES: Ponzi Schemer, 86, Pleads Guilty; Stephen J. Klos Ripped Off Fellow Senior Citizens, Prosecutors Say

    Stephen J. Klos, an 86-year-old church usher who sold elderly congregants in the Seattle area into a $3 million Ponzi scheme that began in 2004, has pleaded guilty to 10 counts of securities fraud, the office of King County Prosecuting Attorney Daniel T. Satterberg said.

    Klos “met several of victims at his church and told them that he would invest their money but used most of it to repay prior investors and for his personal benefit,” Satterberg’s office said. He faces between 51 and 68 months in prison when sentenced Dec. 28 by Judge Bruce Heller.

    Only four years short of his 90th birthday, Klos now joins a curiously long list of convicted or alleged Ponzi schemers and/or swindlers who were detected or charged after their 65th birthdays.

    Others on the list include Bernard Madoff (New York/Florida); Andy Bowdoin (Florida); Arthur Nadel (Florida/now deceased); Martin B. Feibish (Rhode Island); Richard Piccoli (New York); Anthony Lupas (Pennsylvania); John William “Jack” Cranney (Massachusetts); Pat Kiley (Minnesota); Richard Elkinson (Massachusetts); Edward May (Michigan); John F. Langford (Texas); Hans P. Seibt (Nevada); Louis J. Borstelmann (California); Gerald J. “Jerry” Berke (California/Canada); Richard Horace Mayfield (Colorado); Richard M. Hersch (California); Richard Taft Johnson (Michigan); Julia Ann Schmidt (Texas); Ronald Keith Owens (Texas); James Blackman Roberts (Arkansas); Larry Atkins (North Dakota); Maxwell B. Smith (New Jersey); Judith Zabalaoui (Louisiana); Arthur Ferdig (California).

    NOTE: The list above is incomplete.

  • BULLETIN: 77-Year-Old Ponzi Enabler And His 40-Year-Old Son Who Helped Confuse Investors In Nevin Shapiro’s $930 Million ‘Grocery’ Ponzi Sentenced To Federal Prison; Roberto And Alejandro Torres Also Hit With $82 Million Restitution Order

    BULLETIN: Yesterday a federal judge in Michigan sentenced 75-year-old Ponzi schemer Edward May to 16 years in federal prison for pulling off a $350 million fraud.

    Today in New Jersey — in a separate case — a 77-year-old Ponzi enabler and his Ponzi-enabling, 40-year-old son were sentenced to combined prison terms of just shy of eight years for helping make Nevin Shapiro’s $930 million swindle possible.

    It could have been worse, but the pair later helped unmask the caper they once enabled.

    U.S. District Judge Susan D. Wigenton imposed a 48-month sentence on Roberto Torres, who will not leave prison until he is at least 81. Torres’ son, Alejandro Torres, was imposed a slightly lower sentence: 46 months. Both father and son also were hit with an $82 million restitution order. The elder Torres once resided in Lighthouse Point, Fla., but now lives in New York. His son lives in Boca Raton, Fla.

    When the Torreses will begin serving their terms was not immediately clear.

    Shapiro, 42, formerly of Miami Beach,  is serving a 20-year-term and is liable with Roberto and Alejandro Torres in the restitution order. Both father and son pleaded guilty to a single count of securities fraud. Shapiro pleaded guilty last year to one count of securities fraud and one count of money laundering.

    Roberto Torres was the chief financial officer of  Capitol Investments USA Inc., Shapiro’s phony “grocery” arbitrage business. Alejandro Torres was an accountant at the firm, which hatched a four-year-long scheme beginning in 2005 to siphon money from investors by cooking the books.

    Father and son “admitted to creating, or directing others to create, fraudulent documents which falsely touted the profitability of Capitol’s fictitious grocery diversion business,” the office of U.S. Attorney Paul J. Fishman of the District of New Jersey said today. “The Torreses admitted that those documents included: profit and loss figures fraudulently representing that Capitol’s wholesale grocery business was generating tens of millions of dollars in annual sales; personal and business tax returns for Shapiro and Capitol also fraudulently reflecting those sales; and numerous invoices fraudulently reflecting transactions between Capitol and other companies in the wholesale grocery business.”

    The Shapiro Ponzi, which was based in South Florida, toppled in January 2009, prosecutors said.

    Sydney Jack Williams, 63, of Naples, Fla., faces sentencing in January on charges he was Shapiro’s top recruiter and did not report $12 million in commissions.

  • BULLETIN: Senior Ponzi Schemer Edward May, 75, Sentenced To 16 Years In Federal Prison; $350 Million Ponzi Swindle Called Largest In Eastern Michigan History

    BULLETIN: Edward May, 75, effectively has been sentenced to life in prison for orchestrating an elaborate Ponzi scheme that gathered about $350 million and fleeced 1,200 people. Many of his victims were fellow senior citizens, although May also altered the lives of younger victims.

    Prosecutors described the May Ponzi as the largest in the history of the Eastern Michigan District.

    U.S. District Judge Arthur Tarnow sentenced May today to 16 years after May’s April guilty plea to 59 counts of mail fraud. Prosecutors said May established as many as 150 LLCs to pull off the scheme, which operated for a decade. The SEC sued May in 2007.

    One of May’s victims told prosecutors that he considered suicide after being bilked by May.

    “Complex fraud schemes like this one rob investors of their savings and erode public confidence in legitimate investments,” said U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan. “This loss of public confidence in investment opportunities, in turn, depresses our economy. By prosecuting those who commit fraud, we hope to deter others from committing similar crimes.”

    May falsely traded on the name of Hilton Hotel Corp.,  MGM-Mirage Resorts Inc., the MGM Grand Hotel, Motel 6, the Tropicana Resort Casino and the Sheraton Hotels chain as part of the fraud, according to court filings. He also claimed that he was supplying telecommunications services through a purported “Norwegian” company.

    In an often-heard refrain in the Ponzi world, May went into excuse-making mode when his caper collapsed, claiming payments to investors were delayed because of the company’s growing pains.

  • Edward May, 74, Pleads Guilty In Michigan Ponzi Caper That Gathered $200 Million; Feds Say He Used 150 LLCs As Part Of Spectacular, Decade-Long Fraud

    The senior-citizen Ponzi cavalcade and incredible paperwork maze continues: Edward May, 74, has pleaded guilty in Detroit to 59 counts of mail fraud in a case in which federal prosecutors alleged he rented office space in Lake Orion, Mich., and established 150 LLCs as part of a $200 million Ponzi scheme that operated for a decade.

    The SEC, which sued May for his operation of E-M Management Co. LLC and associated busineses, said in November 2007 that May had defrauded as many as 1,200 investors by selling them “interests” in the LLCs.

    Many of the investors were “elderly” persons, the SEC said, adding that May also was selling unregistered securities.

    As part of the fraud, May traded on the name of Hilton Hotel Corp. and planted the seed that he was supplying telecommunications services to the famous company through a “Norwegian” company.

    It was a lie, the SEC said. It also was a lie when May made similar claims and traded on the names of MGM-Mirage Resorts Inc., the MGM Grand Hotel, Motel 6, the Tropicana Resort Casino and the Sheraton Hotels chain.

    The Ponzi collapsed by July 2007, and May went into excuse-making mode by claiming payments were delayed because of the company’s growing pains — specifically claiming that “mailing accuracy” had suffered because the number of LLCs had grown and created a “volume” problem, the SEC said.

    By September 2007, however, he started pitching investors on an opportunity to invest in a Michigan “concrete company,” the SEC said.

    What May actually was doing, investigators said, was running a Ponzi scheme and ripping off investors to pay his gambling debts and other personal expenses.

    In September 2009, the SEC alleged that Frank Bluestein, who ran a company known as Fast Frank Inc., was “the single largest salesperson” for May’s fraud.

    Bluestein, 59 when the SEC case against him was brought, raised $74 million, in part by targeting senior citizens and conducting “seminars” in which seniors were encouraged to “refinance their mortgages for their homes in order to fund their investments,” the SEC alleged.