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“Virtual Concierge” Alleged $70 Million Ponzi Scheme

Posted in Ponzi Profiles

Get ready for virtual profits!

Two South Florida men have been arrested by the FBI in connection with running an alleged $70 million Ponzi scheme. Paul Schumack, 56, and Joseph Signore, 49, are facing multiple charges of conspiracy, wire fraud and mail fraud in what federal authorities say was a scam predicated on the sale of “virtual concierge” machines. In addition to the criminal complaint filed in US District Court in West Palm Beach, the SEC has brought its own civil action and requested an asset freeze against the pair.

From 2012 Schumack and Signore were peddling their virtual concierge machines through their respective business entities TBTI, Inc. and JCS Enterprise Services, Inc. According to an infomercial-style YouTube video the men used for marketing, an ownership stake in virtual concierge machines was a sure ticket to wealth and status, from fancy sports cars to new swimming pools that would have the neighbors out on their lawns gyrating in envy. A $3,500 investment would secure ownership of one of countless virtual concierge machines across the country, delivering $300 a month in advertising revenue for 36 months.

The FBI’s affidavit, however, asserts that interest payments to investors were made not from advertising revenue, but from incoming investor principal. While $70 million was raised, court documents point out, only $100,000 in profits actually derived from the proceeds of ad sales. 1,000 investors signed on with Schumack and Signore, but investigators determined there were only about 100 machines placed around the country, laughably short of the figure needed to produce viable revenue for clients. The pair withdrew a total of over $6 million from company accounts before the entire venture collapsed in January of this year.

 

PAUL SCHUMACK

  • Age: 56
  • Company: TBTI, Inc.
  • Alleged Scam: Virtual Concierge
  • Profits: Over 100%
  • Ponzi Time: 2011-2014
  • Victims: 1,000
  • Amount of Fraud: $70 million
  • Criminal Complaint: Multiple Counts of Fraud, Conspiracy
  • Location: West Palm Beach, CA
  • Court: US District Court, Southern District of FL

US v. Paul Schumack Criminal Complaint

Paul Schumack SEC Complaint

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Wannakuwatte’s Helpers: Who, What & When

Posted in Ponzi Profiles

modthink.com

The civil case against Deepal Wannakuwatte will not stop with a guilty plea in his criminal matter. The pursuit of truth will continue, and the classic questions featuring in any thorough investigation will endure.

What happened? The Wannakuwatte Ponzi scheme is at least $125 million and a dozen years in the making. Civil investigations of the scheme are ongoing.  Civil investigators are gathering records. Investors are compiling losses. Witnesses are identifying participants.

When Could It First Have Been Prevented? The simple truth is that we do not yet know when this scheme could have first been prevented. Civil investigators continue to interview investors. Facts from one investor lead to facts from another. The pieces are being put together to form an overall picture.

Who Could Have Prevented It? Good question. If there’s one thing that you should remember from this short article, it is that this question – “Who Could Have Prevented It?” – will determine which corporations and financial institutions will be liable for the harms and losses caused to innocent investors. Hackard Law is set to prosecute the Wannakuwatte civil case with these factors at the forefront.

Michael A. Hackard, Meriam Hansen, Nou Lee and Jeremy Rutledge are experienced in prosecuting civil actions against Ponzi scheme perpetrators as well as defending and resolving clawback cases filed by Bankruptcy Trustees and SEC Receivers. If you have been a victim in a Ponzi scheme and face legal action, contact Hackard Law today.

Stanford Brokers Targeted in Multimillion Clawback

Posted in Bankruptcy Clawback News, Ponzi Profiles, Ponzi Video

telegraph.co.uk

In the latest dispute over the ruins of Allen Stanford’s $7 billion empire of fraud, 329 former Stanford brokers have been targeted for $215 million. Stanford Receiver Ralph Janvey is looking to undertake clawback action against the onetime sales agents of Stanford Financial Group (SFG), which collapsed in 2009 after its signature certificate of deposit program turned out to be the second-largest Ponzi scheme in American history.

Facing resistance to his latest initiative, Janvey has turned to the Supreme Court for permission to move forward with a blanket lawsuit against all 329 brokers for the commissions and bonuses they earned in the course of selling Stanford CDs. What he’s trying to circumvent is FINRA arbitration of individual cases, a process that attorneys for the brokers say is the only legitimate one on the books. Arbitration had been previously agreed upon by SFG as the means to settle disputes and claims, and the Receiver, they say, is up against “an unbroken line of [legal] authority dating back 75 years.” Janvey’s lawyers, meanwhile, assert that arbitration arrangements made during Stanford’s bogus reign are no longer valid, and therefore the brokers can be hit with a one-size-fits-all adversary suit.

No longer the toast of Caribbean cricket tournaments, Stanford himself is now sitting out a 110-year sentence in federal prison. Whatever the Court might decide in this new chapter of asset clawback efforts, it will likely be of little consolation to Stanford victims, who have seen about 1% compensation for their losses – a single penny to the dollar. Janvey has undergone criticism for his management of the receivership – attorneys conducting the case have taken $155 million in fees, while 30,000 Stanford victims have received $55 million. Hope for recovery might rest in the ability of investors to pursue class-action litigation at the state level, a recourse which was affirmed to them by the Court in a ruling from February of this year.

Michael A. Hackard, Meriam Hansen, Nou Lee and Jeremy Rutledge are experienced in prosecuting civil actions against Ponzi scheme perpetrators as well as defending and resolving clawback cases filed by Bankruptcy Trustees and SEC Receivers. If you have been a victim in a Ponzi scheme and face legal action, contact Hackard Law today.

Ponzi Roundup: Two Guilty Pleas and International Clawback

Posted in Ponzi Profiles

CBS Television

Tom Petters: Clawback efforts in the aftermath of Minnesota mega-fraudster Thomas Petters’ $3.65 billion Ponzi scheme have escalated to a new level, with the case’s bankruptcy trustee looking to pursue actions to recover funds in several foreign countries. Asserting that “potentially hundreds of millions of dollars” found their way to international investors, Trustee Douglas Kelley’s lawyers have made a request with Chief US Bankruptcy Judge Gregory Kishel for authority to act abroad as representatives of the Petters estate. Kelley told reporters from the Minneapolis Star-Tribune that clawback litigation was possible in 26 overseas jurisdictions including Australia, Ireland, Switzerland and Malta. Many of the adversary cases would likely focus on locations like the British Virgin Islands, Bermuda and the Cayman Islands, where hedge funds and other feeders funneled significant proceeds.

Russell Adler: Ponzi extraordinaire Scott Rothstein’s former law partner Russell Adler agreed to plead guilty to a count of conspiracy in US District Court in Fort Lauderdale today. Adler, once a senior member at Rothstein’s firm RRA, admitted that he participated in bundling campaign funds for John McCain’s presidential campaign and former Florida Governor Charlie Crist’s Senate run in 2008. Adler contributed $204,000 to the McCain campaign alone, for which he received two “reimbursement” checks from RRA totaling $283,000. Until his $1.2 billion scam imploded in late 2009, Rothstein was highly active in building a base of influence among state and national-level politicians, whom he generously financed. Adler could receive up to five years in federal prison, though depending on his cooperation in related cases, the US Attorney’s Office could recommend a lower sentence.

Doris Nelson: Doris “Dee” Nelson, the architect of a $135 million Ponzi scheme centered in Spokane, WA, and British Columbia, decided to plead guilty to the 110 counts against her mere days before her trial was set to commence. From 1999 to 2008, Nelson had used her lending business Little Loan Shoppe to recruit investors with promises of up to 75% annual returns. As the fraud neared collapse, Nelson claimed that Little Loan Shoppe was “defying financial gravity” with its consistently outsized profits in order to attract new funds to recycle back out. Around $118 million in fictitious interest was distributed to investor-victims, of whom there may be as many as 800, while another portion of their money was used by Nelson for items such as luxury vehicles, jewelry and travel. She is scheduled to be sentenced in July.

Michael A. Hackard, Meriam Hansen, Nou Lee and Jeremy Rutledge are experienced in prosecuting civil actions against Ponzi scheme perpetrators as well as defending and resolving clawback cases filed by Bankruptcy Trustees and SEC Receivers. If you have been a victim in a Ponzi scheme and face legal action, contact Hackard Law today.

Wannakuwatte Likely to Change Plea on Fraud Charges

Posted in Ponzi Profiles

The following is an update from Hackard Law attorney Jeremy Rutledge, who attended a Status Conference for Deepal Wannakuwatte in US District Court today in Sacramento. Wannakuwatte is accused of running a Ponzi scheme on a scale of anywhere from $125 million to $300 million. He currently faces charges of bank fraud.

Today’s Status Conference was quite brief.  Don Heller, the defense attorney representing Wannakuwatte, discussed his client’s desire to change his plea.  Originally, on March 20, 2014, Wannakuwatte pled not guilty to all charges against him and requested a jury trial.  Any guesses as to Wannakuwatte and his attorney’s motives are mere speculation, but it appears likely that Wannakuwatte, his counsel, and the US Attorney’s Office may be working on a plea deal wherein Wannakuwatte pleads guilty to some of the counts alleged against him.

Officially, the court concluded the Status Conference and scheduled a Change of Plea Hearing that will be held on May 1, 2014 at 9:30 AM in the same Court Room.

A “Change of Plea Hearing” generally occurs when the defendant reconsiders and chooses to plead guilty to charges against him.  The Prosecutor may agree to a plea bargain before the trial date.  This may be a reduction in the number of charges, the actual charge may be changed or the US Attorney may agree to recommend an amount of federal prison time in exchange for the guilty plea.

Michael A. Hackard, Meriam Hansen, Nou Lee and Jeremy Rutledge are experienced in prosecuting civil actions against Ponzi scheme perpetrators as well as defending and resolving clawback cases filed by Bankruptcy Trustees and SEC Receivers. If you have been a victim in a Ponzi scheme and face legal action, contact Hackard Law today.