Former UGA Coach Accused of Operating a Ponzi Scheme

‘Expert’ analyses and saw-it-with-my-own-eyes observations are worthless until you have done so.

If you sell a car or a television on Craig’s List and the buyer isn’t happy, there isn’t much he or she can do.  You don’t need a license to sell your old car or your old television, and the damage is limited to the price of what you sold. If you are selling investments that meet the legal definition of a “security,” though, you have to have a license, because the damage you can do by selling securities can last for generations. (more…)

Canadian Police Shutter Alleged Ponzi Scheme

A very powerful cognitive bias leads us to believe that we somehow pop out of the womb fully able to recognize a competent scam, when we have to learn how to do everything else.

Through more than two decades of swimming in an ocean of sociopaths, career criminals, bunglers, and reckless stockbrokers, I’ve learned a few things about investment fraud. For purposes of today’s post, I’ll share three of those observations (as Jimmy Durante used to say, “I’ve got a million of ‘em”).  First, fraud is global. It happens as much in Japan, Russia, and South Africa, per capita, as it does in the United States. Second, fraud never slumps, but adapts to the current economic environment.  Third, fraud is ever evolving and always becoming harder to spot.  A recent case out of Canada validates all three of those observations. According to thespec.com: (more…)

The IPO Effect

Investment scamsters know that the promise of an impending IPO puts dollar signs in the eyes of prospective investors.

You don’t have to know much about investing to know that owning Facebook shares before the stock goes public would put money in your pocket. Imagine being one of the people who owned shares of Microsoft or Apple in the days before the initial public offering (IPO) for those companies. Investment scamsters know that the promise of an impending IPO puts dollar signs in the eyes of prospective investors. Regulators in Alberta believe that they have caught a company taking advantage of this “IPO effect.” According to Business Review Canada: (more…)

Alberta Regulators Halt Alleged Bridge Financing Ponzi

If you know of an investment making the same claim, please report it to local regulators.

TransCap Corporation came into existence in 2001. Operating from headquarters in Calgary, Alberta, it traded bonds and provided bridge financing.  A related company, Strata Corporation, came along in 2008 with a stated purpose of raising funds to loan to TransCap. The Alberta Securities Commission alleges that both companies were part of a Ponzi scheme that reaped more than $50 million. According to SunNews: (more…)

Vancouver Case Reveals Shocking Lapse in Protection for Canadian Investors

Only the well trained should venture forth.

Among the advice that I give most often on this blog is to always call your state securities commissioner to find out whether the person offering you an investment is licensed to do so. My unscientific estimate is that we could wipe out 20 percent of annual investment fraud losses by convincing everyone to take this one easy precaution. But, it seems, that advice would not help Canadian investors. According to The Vancouver Sun: (more…)

Article Highlights The Mob’s Involvement in Investment Fraud

Keeping your money safe from organized criminals is not as easy as you think.

A fascinating article in the National Post of Canada breaks down the type of investment fraud most often committed in each of the Canadian provinces. Some provinces are known for pump and dump schemes. Others are hotbeds of Ponzi schemes. What is really eye-opening about the article is the degree to which it exposes organized crime’s involvement in investment fraud. According to the article (which you should read in its entirety): (more…)

Canada Needs An SEC

Mogilevich, without ever leaving the comfort of his home in Russia, orchestrated a massive pump and dump scam that made the Toronto Stock Exchange an unwitting accomplice.

In the U.S. we have no fewer than 51 securities regulators: the SEC, of course, and a counterpart for each state. Did you know that Canada has no counterpart to the SEC? Each province and territory has its own securities regulator, but there is no national regulator to help with the crush of securities law violations, including fraud, that plagues every country. Not only is Canada not exempt from the global crisis of investment fraud, it has been a favorite launching pad for some of the most notorious stock scams in recent memory. I talk about one of them in Chapter 4 of The Vigilant Investor: (more…)

Man Who Defrauded Nova Scotia Investors Still on the Lam After Five Years

Were there any red flags here that a vigilant investor might have seen and heeded?  Sure; there always are.

Accused Ponzi scamster Quintin Sponagle allegedly used a Panamanian corporation, Jabez Financial Services Inc., to run his scheme.  He had investors write checks to Jabez. He deposited those checks, then spent the money as if it were his own.  The Nova Scotia Securities Commission is holding a hearing into the activities of Jabez.  But, there is one key witness who won’t be at the hearing — Sponagle.  When he sensed the authorities closing in, he fled, and no one has heard from him in five years.  They’ll catch him eventually.  They always do.

According to The Chronicle Herald: (more…)

Hedge Fund Fraud + Pump and Dump = Portfolio Pumping

Expect to see more portfolio pumping scams. The potential of the scam is too great for scam artists to pass it by.

It was only a matter of time before someone put the two scams together.  The U.S. Securities and Exchange Commission (SEC) believes it has found a scam that combined a hedge fund fraud with a pump and dump scheme to form what’s known as a “portfolio pumping” scheme.  According to the SEC’s press release: (more…)

CFTC Finds Alleged Ponzi in Ohio

Investment schemes involving supposed trading in foreign currency are always out there.

Most of the enforcement cases we report on come from the U.S. Securities and Exchange Commission (SEC) or state securities regulators.  But the U.S. Commodities Futures Trading Commission (CFTC) also has an effective enforcement division on the lookout for investment fraud.  This week the CFTC announced an enforcement action against what it believes to be a multi-million Ponzi scheme operating on both sides of the U.S./Canadian border.  The CFTC’s press release reads, in part: (more…)

Study Reveals the Pain of Investment Fraud

What keeps many from protecting themselves from this pain is the persistent, hardwired belief that such tragedy will never happen to them.

A group of seven senior citizens calling themselves the Earl Jones Fraud Assistance Information and Assistance Service has studied the impact of investment fraud on the victims.  (Earl Jones is the Montreal businessman sentence to 11 years in prison for running a decade-long Ponzi scheme which robbed more than 180 victims of more than $45 million).  Funded by the Quebec Ministry for the Elderly, the study shows the painful human toll that investment scams take from those who lose their life savings to those scams.  Covering the study for TheSuburban.com, Ian Howarth writes: (more…)

Police Suspect a Possible Affinity Fraud Ponzi Scheme in Suburban Montreal

The fraud that we like to believe will never draw near to us is as prevalent as pollen in the springtime and as close as our next door neighbor.

Joel Goldenberg of TheSuburban.com has written an article about police suspicions that a Hampstead, Quebec resident has been operating a Ponzi scheme, possibly targeting Orthodox Jews. Specifically, Goldenberg writes that Perry Newman and his company, Dover Financial Corp. (Dover), are drawing scrutiny from the Montreal Police.  Goldenberg’s article is helpful, because it describes an all-too-common scenario in which an investor learns that what she thought was a comfortable nest egg is gone. Quoting extensively from involuntary bankruptcy petitions filed against Newman and Dover, Goldenberg writes: (more…)

Hedge Funds - If You’re Going to Skip an Investigation, Take Your Nest Egg to Vegas Instead; You’ll Have More Fun Losing It

The only way to make any hedge fund investment a tolerable risk is to get a professional investigation on the fund and the manager.

From north of the border comes a case that illustrates the importance of getting a professional investigation of any hedge fund in which you intend to invest.  The Ontario Securities Commission (“OSC”) is pursuing a case against Otto Spork (“Spork”), Sextant Capital Management Inc., and Sextant Strategic Opportunities Hedge Fund, claiming that Stork overstated the value of speculative investments he held in those hedge funds and that he took higher management and performance fees based on those allegedly false higher valuations.  While the Chief Compliance Officer of Sextant Capital has settled with the OSC, Mr. Spork is contesting the charges.

(more…)

Justice Department Charges Former Bank Robber with Running a Global Ponzi Scheme

Federal prosecutors in Illinois have alleged that Nicholas Smirnow (aka Nicoloy Smirnow, Alexander Judizcev, Nicholas Kachura and Jeff Prozorowiczm) used the internet to defraud more than 40,000 on six continents, in 118 countries, and in 48 of the United States out of more than $70 million.

In a reminder of just how small the world has become, federal prosecutors in Illinois have alleged that Nicholas Smirnow (aka Nicoloy Smirnow, Alexander Judizcev, Nicholas Kachura and Jeff Prozorowiczm) used the internet to defraud more than 40,000 on six continents, in 118 countries, and in 48 of the United States out of more than $70 million.  The alleged Ponzi scheme, called Pathways-2-Prosperity, promised massive returns for short-term investments (seven days to 60 days). (more…)

Ninja Appears in Ponzi Case

Those who operate these scams have imaginations as big as their appetite for money.

In September 2009 we wrote a three-part blog series on the Syndicated Gold Depository, S.A. (“SGD”) Ponzi scheme,which bilked more than $100 million from more than 3,000 investors across the globe.  According to the Royal Canadian Mounted Police (RCMP), Gary Sorenson and Milowe Brost lured people into investments in SGD which was supposed to loan investor money out to another company, Merendon Mining Corp. Ltd., (MMC) at interest rates that would provide a healthy return for investors.  The SGD scam operated for more almost ten years, from 1999 to 2008.   The RCMP arrested Brost but took longer to track down Sorenson who had a home in Honduras.   (more…)

Why That ‘Sure Thing’ Isn’t

Why That ‘Sure Thing’ Isn’t

In February 2009 we posted about George Georgiou, accused of manipulating the market in the securities of four micro-cap companies:  Avicena Group, Inc., Neutron Enterprises, Inc., Hydrogen Hybrid Technologies, Inc., and Northern Ethanol, Inc.  Last week a federal jury convicted Georgiou on criminal charges stemming from the same conduct alleged by the SEC.  The SEC’s press release summarizes the allegations against Georgiou: (more…)

Arrest Warrant Issued for “Chinese Donald Trump”

In April 2009, we covered the U.S. Securities and Exchange Commission’s emergency action to halt an alleged Ponzi scheme being run by Weizhen Tang.  Canadian authorities have now issued a warrant for the arrest of the Toronto-based Tang.  He had agreed to surrender to authorities on December 29, 2009, but did not keep the appointment.  Officials believe that Tang is now in China.

In April 2009, we covered the U.S. Securities and Exchange Commission’s emergency action to halt an alleged Ponzi scheme being run by Weizhen Tang.  Canadian authorities have now issued a warrant for the arrest of the Toronto-based Tang.  He had agreed to surrender to authorities on December 29, 2009, but did not keep the appointment.  Officials believe that Tang is now in China. (more…)

 

Lessons from the SGD Ponzi (Part 3)

We are drawing lessons from the $100 million Syndicated Gold Depository, S.A. scam. In our first installment we showed how scam artists are more than willing to spend money (yours) to create the illusion of a legitimate company. In Part Two we pointed out that many of the 3,000 victims were first introduced [...]

We are drawing lessons from the $100 million Syndicated Gold Depository, S.A. scam. In our first installment we showed how scam artists are more than willing to spend money (yours) to create the illusion of a legitimate company. In Part Two we pointed out that many of the 3,000 victims were first introduced to the scam by trusted friends or advisers such as accountants. Today we discuss one of the most dastardly tactics that scam artists (including, reportedly, Gary Sorenson and Milowe Brost, the principals of SGD) use.  (more…)

 

Lessons from the SGD Scam (Part 2)

We are exploring lessons we can learn from the recently exposed $100 million Ponzi scheme operated out of Alberta, Canada by Gary Sorenson and Milowe Brost  Yesterday we looked at how competent scam artists invest money (yours) in creating a passable illusion of a profit generating business.  Today we will look at how scam artists sneak past [...]

We are exploring lessons we can learn from the recently exposed $100 million Ponzi scheme operated out of Alberta, Canada by Gary Sorenson and Milowe Brost  Yesterday we looked at how competent scam artists invest money (yours) in creating a passable illusion of a profit generating business.  Today we will look at how scam artists sneak past your skeptical nature and grab your nest egg. (more…)

 
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