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Tag: New York Ponzi schemes

  • BULLETIN: Feds Say New York Man Was Running $50 Million Real-Estate Ponzi Swindle; Gershon Barkany Arrested By FBI

    breakingnews72BULLETIN: A man in the Far Rockaway section of the New York City Borough of Queens was running a $50 million real-estate Ponzi swindle that duped investors into believing they were investing in a “risk-free” flipping scheme involving large properties in New York and New Jersey, federal prosecutors said.

    Gershon Barkany, 29, was arrested today by the FBI.

    “As alleged, Barkany promised a get-rich-quick investment scheme that really had potential to enrich only him,” said George Venizelos, assistant director-in-charge of the New York FBI office. “There were no investment properties, just a house of cards built on a foundation of lies.”

    From a statement by the office of Loretta E. Lynch, the U.S. Attorney for the Eastern District of New York (Italics added):

    According to the criminal complaint that was unsealed this morning, Barkany induced at least five investors to wire transfer large sums of money supposedly to purchase real estate in Manhattan, Queens, the Bronx and Atlantic City, New Jersey. According to one of the investor victims, Barkany claimed that the sellers of these properties would only close on the real estate sales contracts after Barkany had located a purchaser who would be willing to buy the property from Barkany at a higher price. In that way, Barkany assured the victim that the real estate deals would be “risk free.”

    In fact, the real estate deals did not exist. As part of Barkany’s Ponzi scheme, he diverted some of the funds he received to pay investors whom he had earlier defrauded. The defendant also lost some of the funds in gambling and otherwise used the money for his own benefit.

  • BULLETIN(S): (1) Missouri Con Man, 72, Charged In Alleged $3.18 Million Ponzi Caper While Jailed In Previous Fraud Scheme; (2) New York Woman Was Running Multiple Ponzi And Fraud Schemes That Gathered More Than $9 Million, Feds Say

    BULLETIN: A 72-year-old Missouri con man already jailed in a fraud case involving taxes and Pell Grants has been charged with orchestrating a Ponzi scheme that allegedly followed on the heels of his original scam.

    Ronald W. Shepard pulled off a Ponzi scheme involving more than $3 million, the office of U.S. Attorney Beth Phillips of the Western District of Missouri said.

    Separately, a woman has been charged with running multiple Ponzi and fraud schemes that sucked in $9 million, the office of U.S. Attorney Loretta E. Lynch of the Eastern District of New York said.

    Charged in the alleged New York capers was Laurie Schneider, 37, of Oceanside.

    One of Schneider’s schemes involved a “shell company” known as Janitorial Close-Out City Corp. In that scheme, Schneider duped 25 investors into believing she invested in industrial equipment and machinery manufactured by companies in China and sold products wholesale at a tremendous profit, federal prosecutors said.

    But it was a $4 million-plus Ponzi that promised enormous returns of up to 60 percent and paid investors with money from other investors. Another fraud scheme hatched by Schneider fetched $5 million, bringing the combined fraud intake to more than $9 million, prosecutors said.

    “As alleged, this defendant falsely represented herself as having international business connections that would benefit her investors, when in reality she was engaged in purely homegrown fraud and deception,” Lynch said.

    In the Shepard case, records show that the con man already is jailed in Arkansas for his original Missouri scam involving taxes and Pell Grants. In that 2007 scam, Shepard was accused of preparing and and submitting “false financial aid documents and tax returns to the Department of Education, as well as various colleges and universities, in order to obtain financial aid for his clients and their children. Shepard also allegedly prepared and submitted false federal income tax returns to the Internal Revenue Service in order to obtain inflated refunds for his clients.”

    Shepard initially was sentenced in 2009 to five years’ probation in the tax and Pell Grants scam. Pell Grants are named after the late Sen. Claiborne Pell, D.-Rhode Island. The grants provide financial aid to eligible college students.

    As part of his probation, Shepard was ordered not to be employed “in any capacity in which he would act in a fiduciary capacity,” not to commit any crimes and not to lie to his probation officer.

    After the government demonstrated that Shepard had a role in an ongoing scam involving other people’s money and had played word games with his probation officer, the judge revoked Shepard’s probation and ordered a five-year prison sentence. Although Shepard appealed, he lost.

    State and federal investigations continued while Shepard entered the prison system in the tax and Pell Grants case. The probe culminated in a Ponzi indictment charging Shepard with 13 counts of mail fraud and two counts of money laundering.

    Prosecutors said he raised more than $3 million in his Ponzi scheme, which involved a company known as Safety Solutions USA LLC that was developing a tow hitch and seeking a patent. The patent application was declined, but Shepard had promised investment returns of up to 100 percent, prosecutors said.

    Shepard, formerly of Lees Summit, Mo., also was involved with a real-estate firm known as “The Real Estate.”

    “Shepard allegedly told investors that their money was used to purchase property in Kansas City, the Lake of the Ozarks and Hawaii,” prosecutors said. “Except for purchasing his own personal residence at the Lake of the Ozarks, the indictment says, Shepard did not purchase any real estate. Instead, the indictment alleges that Shepard used investor funds for personal living expenses, to pay other investors, to pay relatives, in disbursements of cash to himself and in real estate ventures.”

    All in all, prosecutors said, Shepard took in more than $3.18 million though his Ponzi, paid bogus returns of more than $1.2 million — “and lost or spent the rest,” resulting in investors losses of at least $1.8 million.

  • NEWS/UPDATES: Feds Say $900 Million Nevin Shapiro Ponzi ‘Perfect Example Of Greed Run Amok’; Colorado Charges Bela Geczy, Michael Kass With Racketeering In Fraud Case

    The acts of Nevin Shapiro — a Florida man arrested in New Jersey yesterday on charges of orchestrating a $900 million Ponzi scheme — represent a “perfect example of greed run amok,” an FBI agent said.

    Separately, a grand jury in Colorado has charged two men under the state’s organized-crime statute with operating an $18 million securities-fraud scheme that affected at least 270 investors.

    Arrested in Colorado were Bela Geczy, 57, of Longmont, and Michael Brian Kass, 48, of Boulder. Authorities said they orchestrated a massive Ponzi scheme involving domestic and offshore business opportunities.

    The court docket in the cases against Geczy and Kass shows two dozen felony counts, including violations of the Colorado Organized Crime Control Act, conspiracy to commit securities fraud, securities fraud by fraud or deceit and securities fraud by untrue statement or omission.

    Like Florida, Minnesota, Washington, New York, South Carolina, California, Michigan and other states, Colorado has been plagued by Ponzi and fraud schemes. No fewer than five major Ponzi or financial fraud probes are under way in Colorado. Records suggest the highly complex frauds involved more than $100 million.

    In New York alone this week, two major financial-fraud cases were filed. The schemes involved in the neighborhood of $101.5 million, according to court filings. Meanwhile, U.S. Attorney Jenny A. Durkan of the Western District of Washington outlined five major Ponzi probes in various states of completion in the Greater Seattle area. These cases involve tens of millions of dollars, according to records.

    At the same time, the main page of the website of U.S. Attorney B. Todd Jones of the District of Minnesota features links to three major Ponzi cases in various stages of investigation. One of the cases is the Tom Petters’ Ponzi case. Petters was sentenced this month to 50 years in federal prison for presiding over a $3.65 billion fraud.

    Jones’ website also includes information on a Ponzi case involving at least $190 million. Trevor Cook pleaded guilty to mail fraud and tax evasion in the fraud earlier this month, and is awaiting sentencing. The website also includes information on the investigation into the business practices of Steve Renner in an alleged autosurf Ponzi scheme case involving tens of millions of dollars.

    Florida/New Jersey Cases Against Nevin Shapiro

    Shapiro, 41, was a prominent Miami Beach businessman. Authorities now say he was operating a Ponzi scheme since 2005 that rivaled the $1.2 billion Scott Rothstein scheme in dollar volume. Rothstein pleaded guilty in his massive fraud case earlier this year.

    Like Rothstein, Shapiro liked to chum around with sports figures and live large, according to records.

    Shapiro used “stolen funds to purchase a pair of diamond-studded handcuffs, which he gave as a gift to a prominent professional athlete,” prosecutors said. He also spent more than $400,000 for floor seats to watch the Miami Heat, a team in the NBA.

    At the same time, prosecutors said, he spent about $26,000 per month on mortgage payments on his $5.3 million residence in Miami Beach, while directing about $7,250 per month for payments on a $1.5 million dollar Riviera yacht and roughly $4,700 per month for the lease of a Mercedes-Benz.

    Viewed on a yearly basis, the payments on the residence, yacht and car alone consumed more than $450,000 — and yet Shapiro’s purported business produced no sales.

    A veteran FBI agent said the case was about naked greed.

    “This case is a perfect example of greed run amok,” said FBI Special Agent in Charge Michael B. Ward. “In pursuit of wealth and a lifestyle he was otherwise unable to attain, Mr. Shapiro allegedly preyed upon unsuspecting investors looking to secure a safe place to maximize their investments.  Instead, their futures have been irrevocably damaged.”

    Although purportedly in the business of buying groceries in a lower-priced market and selling them wholesale in markets in which they would fetch higher prices, Shapiro’s company largely was a mirage that conducted virtually no legitimate business after 2004 and sustained itself by paying investors with the money of other investors, prosecutors said.

    “Nevin Shapiro is charged with tricking investors with false documents and false promises,” said U.S. Attorney Paul J. Fishman of the District of New Jersey. “He spent tens of millions of their money on gambling debts, lavish gifts and a luxury lifestyle built on a house of cards.”

    Authorities gave credit for the Shapiro criminal collar and an accompanying civil action by the SEC to the combined investigative efforts of the Financial Fraud Enforcement Task Force. President Obama formed the Task Force in November 2009.

    Shapiro, prosecutors said, diverted at least $38 million in investors’ funds for his own use, and investors now are out tens of millions of dollars.

    A girlfriend received goods totaling $116,000 from a charge card, which Shapiro used to rack up $640,000 in personal purchases, according to court records.

    The IRS is part of the investigative team in the Shapiro case.

    “Scammers, con artists and swindlers will do and say anything to get you to buy into their scheme,” stated William P. Offord, Special Agent in Charge, IRS-Criminal Investigation.

    Like his investigative colleagues in other Ponzi cases, Offord reuttered the age-old adage:

    “Remember the old cliche,” he said.  “If it’s too good to be true, it probably is.’”