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Tag: Massachusetts Ponzi schemes

  • New Count Of Loan-Sharking Filed Against Accused Ponzi Schemer

    breakingnews72Already facing criminal Ponzi and loan-sharking charges in Massachusetts and a disgorgement order of at least $3.1 million in an SEC civil case brought him in April 2013, Steven Palladino faces a new hurdle: He has been arrested again for loan-sharking.

    That arrest came yesterday, according to the office of Suffolk County (Mass.) District Attorney Daniel F. Conley.

    Less than two months ago (July 18, 2013), the SEC said it had obtained a disgorgement order of at least $3.1 million against Palladino and his company, Viking Financial Group Inc.

    On Aug. 11, Palladino repeatedly “began calling and texting” to demand repayment of $30,000 from a customer to whom he’d provided an illegal loan in February 2013 at a usurious interest rate of 40 percent,  Conley’s office said.

    “The victim contacted Boston Police, who yesterday apprehended Palladino in his 2012 Mercedes CLS 63 AMG Coupe at a West Roxbury gas station,” Conley’s office said. ” In his pockets were wads of cash totaling $4,395 and a check to the Viking Financial Group for $3,499.47.”

  • MASS. ATTORNEY GENERAL: Former Middlesex County Banker Was Ponzi Schemer Who Scammed For 12 Years And Created Bogus CD Receipts And 1099s

    ponzinews1A Massachusetts woman formerly employed at Bank of America ran a Ponzi scheme on the side, forged withdrawal slips and stole millions of dollars from family and friends over a period of 12 years, the state’s attorney general said.

    Elaina Patterson, 53, of Wilmington, has been indicted on charges of Larceny over $250 from a Person over Sixty (15 counts) and Larceny over $250 (16 counts).

    Bank of America discovered the fraud during an internal investigation in 2011 and alerted the office of Attorney General Martha Coakley, Coakley’s office said.

    Patterson allegedly offered customers “fake” investment products and created bogus receipts for certificates of deposit and 1099 tax forms as part of the fraud. The scheme allegedly began in 1999, prior to Bank of America’s ownership of the bank.

    “We allege that this defendant used her position as a banker to garner trust from friends and family, and then pushed fake investment opportunities that promised high rates of interest,” Coakley said. “Once this scheme began to unravel, we allege that she began to steal from customers in order to fund withdrawals from investors and cover her illegal activity.”

    Patterson was indicted by a grand jury in Middlesex County. She had worked at a branch bank in the small city of Reading, Mass.

    From a statement by Coakley’s office (italics added):

    Authorities allege that between July 1999 and September 2011, Patterson made approximately $6 million in fraudulent transactions involving 31 investors and customers.

    At the beginning of the scheme, Patterson allegedly persuaded family and friends to invest their money in accounts that she characterized as offering high interest rates, normally between 10 and 15 percent. Authorities allege that she regularly portrayed these accounts as being exclusively for high-level investors and corporations, but said that due to her position at the bank, she was able to set up these accounts for family and friends.

    The investigation allegedly revealed that Patterson convinced 15 family members and friends to invest nearly $4.5 million as a part of this scheme, and that she issued fake certificate of deposit receipts and Form 1099s on bank forms to make the investments appear legitimate. Authorities allege that, in a number of instances, Patterson set up accounts in the investors’ names without their knowledge, put her own address on the accounts, deposited the investors’ funds, and used the money both to fund payments to other investors and to funnel money into her personal accounts.

    Further investigation allegedly revealed that beginning in 2009, Patterson began stealing money from the accounts of customers, many of them elderly, in order to conceal her previous theft from investors. Authorities allege that Patterson stole almost $1.5 million from 16 different customers by forging signatures on withdrawal slips. She allegedly used approximately $400,000 of this amount to repay customers stolen from earlier in the scheme and the majority of the balance of that stolen money to fund “interest payments” and other payments to the investors. 

    In the end, investigators uncovered a total of approximately $6 million in alleged fraudulent transactions. Patterson made payments back to customers and investors of almost $3.8 million, leaving the total alleged net theft at more than $2.1 million.

  • BULLETIN: Massachusetts Charges Purported Top 20 Shaklee MLM Distributor, Amid Allegations He Drafted Downline Members Into $10.4 Million Ponzi Scheme He Ran Through His Private Companies

    John William "Jack" Cranney

    BULLETIN: (UPDATED 5:03 P.M. EDT (U.S.A.) The office of Massachusetts Secretary of State William Galvin has alleged that a man who described himself as a Top 20 distributor for Shaklee Corp. — a multilevel marketing firm — drafted members of his 50,000-strong downline into a $10.4 million Ponzi scheme and promissory-notes scam that he was operating through his private companies.

    John William “Jack” Cranney, 70, of Belmont, Mass., has been named in a cease-and-desist order that alleges the sale of unregistered securities and a fraud scheme affecting at least 36 people in 14 states through at least five businesses he created. The scheme was targeted at people Cranney got to know through Shaklee — and senior citizens were among the victims, Galvin’s office said in a complaint.

    Cranney had been a Shaklee rep for 45 years, and the “Cranney family brought the Shaklee business to New England,” investigators said.

    Investigators identified the businesses as Cranney Capital I LLC, Cranney Capital I Employee Stock Ownership Trust, Cranney Capital II LLC, Cranney Capital III Inc., and Cranney Industries, d/b/a Belmont Industries.

    “Cranney used his affiliation with family, friends and colleagues at Shaklee Corporation . . . many of whom he has known for fifteen (15) to twenty (20) years . . . to gain their trust and solicit investments,” investigators charged. “The majority of Cranney’s victims are affiliated with Shaklee and many are senior citizens.”

    And Cranney, according to investigators, falsely told his Shaklee victims that he was a “financial advisor and/or investment fund manager.”

    In reality, investigators said, Cranney was at the helm of a scam that began in 2002 and “enticed unsuspecting victims with promises of high returns on safe investments.”

    Some victims believed they were investing in a retirement plan, investigators said.

    Named in the complaint as a “related party” but not charged was Howard Musin, whom investigators said was the registered agent of three of the Cranney companies.

    “Musin has prepared tax returns for Cranney and his related corporate entities and other distributors for Shaklee up until 2011. In July of 2011, a federal court permanently barred Musin, his wife Jill Schwartz-Musin, and their three companies (SSC Services Inc., M-S Services Inc. and Schwartz’s Systems Corporation) from preparing tax returns for others after engaging in misconduct and fraud in preparing tax returns,” investigators said.

    That fraud, according to investigators, involved the fabrication of “deductible business expenses” for clients, including Shaklee distributors.

    Musin was in Cranney’s Shaklee downline, investigators said.

    Read the complaint.

     

  • ‘Uniform’ Ponzi Swindler Richard Elkinson, 78, Sentenced To 102 Months In Federal Prison; 20-Year Scheme Collapsed After Arrest Of Bernard Madoff

    Richard Elkinson, the 78-year-old Ponzi swindler whose promissory notes scheme gathered $29 million over 20 years, has been sentenced to 102 months in federal prison.

    Elkinson resided in Framingham, Mass., and told investors he was in the business of providing uniforms to the government and other entities.

    But it was all a scam that lured investors with promises of outsize returns of between 9 percent and 15 percent in less than a year, federal prosecutors, the FBI and the SEC said.

    The scheme began to collapse in late 2008 after investors — motivated by the publicity the Bernard Madoff Ponzi began to receive  — “started seeking more information and documents about the uniform business,” the office of U.S. Attorney Carmen M. Ortiz of the District of Massachusetts said yesterday.

    Madoff, himself a senior swindler at the helm of a long-running Ponzi caper, was arrested on Dec. 11, 2008.

    Although Elkinson initially lulled investors in early 2009 with a variety of excuses about why he wasn’t making payments, he later fled Massachusetts. Elkinson was arrested at a Mississippi casino in January 2010. Investigators said they discovered evidence that the con man had an affinity for gambling and had conducted “a total of more than $3.7 million in currency transactions over $10,000” at Las Vegas casinos dating back to 1998.