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Ponzi Clawbacks

Defending Victims of Investment Fraud

Man’s Commodity Trading Robot Wasn’t Real

By Michael Hackard on Posted in Ponzi Profiles

The operators of an unregistered commodity pool have been ordered to cough up millions in penalties for running what regulators say was a $28.4 million Ponzi scheme that swindled 2,000 victims. US District Court Judge Daniel Hurley ruled in a CFTC suit that Philip Milton of Palm Beach Gardens, FL, must pay $10.8 million in restitution and a $7.6 million civil monetary penalty, while his company Trade, LLC is required to fulfill restitution obligations of $11.4 million and pay $28.4 million in penalties. In addition to this, other related commercial entities must disgorge $4.7 million, making for an approximate total of $63 million in payments to the federal government.

From 2007 to 2009 the 65-year-old Milton and his two associates, brothers William and Gregory Center, ran Trade, LLC as a commodity pool trading securities. The men solicited members of three investment clubs with wild claims of 8% monthly returns, nearing an annual windfall of 100%. Milton told them that Trade could produce such hefty yields due to a special proprietary software the firm used. Clients had no reason for concern, he would explain, since risk to principal was minimized by pulling profits off the market at the end of each business day.

Unfortunately for investors, Milton’s trading software was about as genuine as some of the talking robots featured in 1980s TV sitcoms. And while Trade did apply $15 million to its stated purpose, the firm lost money during all but two months of its activity. Milton and Gregory Center misappropriated at least $9.6 million for their own interests, distributing false returns and rewarding themselves with handsome salaries for all their hard work. $4.8 million of that amount was also funneled to three Florida businesses. A victim who with his family invested $200,000 in the scheme traveled from his home in Michigan to tour Trade’s offices in Palm Beach Gardens and inquired how the company was so incredibly successful:

I asked them about the high returns, and they told us they had a mathematical system whereby they would get in certain stocks in the morning and be out by the end of the day… It’s just unconscionable that he could totally make things up.

 

garycoleman.net

PHILIP MILTON

  • Age: 65
  • Company: Trade, LLC
  • Job: Commodities Trader
  • Scam: Commodity Pool
  • Profits: 8% per month
  • Ponzi Time: 2007-2009
  • Number of Victims: 2,000
  • Amount of Fraud: $28.4 million
  • Location: Palm Beach Gardens, FL
  • Complaint: Multiple Violations of Commodity Futures Trade Act
  • Court: US District Court, Southern District of Florida

Philip Milton CFTC Complaint

Philip Milton SEC Complaint

 

Ex-Football Star Threatened Investors, Says US Attorney

By Michael Hackard on Posted in Ponzi Profiles

Warner Bros.

Russ Erxleben, a former kicker for the University of Texas and the New Orleans Saints, is scoring news headlines again after his January indictment for a running a $2 million Ponzi scheme. This time an unsettling detail of the case has emerged: according to the US Attorney’s Office in Austin, Erxleben made death threats to investors in the event they reported their losses to authorities. Federal prosecutors revealed these allegations in the course of the defendant’s bond hearing. Erxleben’s lawyer, meanwhile, says his client poses no flight risk or danger to the community at large.

Despite the prevailing stereotypes, just being an ex-NFL player doesn’t automatically make you a competent, ethical investment broker. In 2005 the 56-year-old Erxleben was fresh out of prison on a previous fraud conviction when he decided to give the investment game another go. Having “learned his lesson,” Erxleben formed a number of companies, among them WALTEC Consultants and MDM Holdings. WALTEC reportedly stood for “We All Like to Earn Cash” while MDM mean “My Damn Money” or “Million Dollar Man.” And because we all like to earn cash, the million-dollar man was soon soliciting funds from investors for a post-WWI German government gold bond program that supposedly produced 100% annual returns.

The only problem with the viability of the German gold bonds was that the business had shut down by 2006. Instead of notifying investors, the prosecution asserts that Erxleben continued selling the instruments along with bogus documentation until 2009. At that time the gridiron great also announced his foray into the world of fine art and began collecting money for the purchase and authentication of Paul Gauguin’s The Sorcerer of Hiva-Oa, which Erxleben said would be worth $58 million. To this end he claimed to be a member of the buyer group Gauguin Partners LLC, to which the US Attorney contends he had no relation.

Menacing investors is not an unknown phenomenon in Ponzi schemes. Recently Sacramento, CA, resident Vincent Singh, accused of operating a $20 million scam, was kept in detention until trial due to victims’ reports that Singh made over-the-phone threats of murder.

US Magistrate Judge Andrew Austin will determine if Erxleben is to be released on bail.

 

mysanantonio.com

RUSSELL ERXLEBEN

  • Age: 56
  • Companies: WALTEC, LRE, MDM
  • Job: Football Player
  • Alleged Scam: Investment in German Gold Bonds, Paintings
  • Profits: 100% per year
  • Ponzi Time: 2005-2009
  • Amount of Fraud: $2 million
  • Location: Austin, TX
  • Indictment: Multiple Counts of Wire Fraud, Securities Fraud
  • Court: US District Court, Western District of Texas

US v. Russell Erxleben Indictment

 

Huckster Bamboozled Church Congregation out of $1.5 Million

By Michael Hackard on Posted in Ponzi Profiles

An Orange County, CA, man has been sentenced to 46 months in prison for running a bogus investment scheme in New Jersey. Robert Schroy, 68, had earlier admitted guilt to counts of wire fraud and tax evasion in a plea agreement with the US Attorney’s Office. In another case of affinity fraud, Schroy had scammed at least 20 Evangelical churchgoers out of $1.5 million through phony “international bank trades.”

From 2004 to 2009, Schroy and two associates solicited investments primarily from members of the now-defunct New Horizon Fellowship in Wyckoff, NJ. Representing himself as a network marketer and operating as principal of the entities “Worldwide Marketing Network” and “Jesus Rallies in Chicagoland,” Schroy told congregants he was involved in a lucrative hush-hush arrangement with the world’s top financial institutions. By agreeing to conditions of secrecy, investors could cash in on “crazy returns” of anywhere from 10 to 100% per week under a minimum half-year agreement. This bonanza was possible, they were led to believe, thanks to arcane overseas banking transactions, which Schroy would ostensibly broker on their behalf.

New Horizon was hoping to build a new church building and sought to use the proceeds for that purpose. To put everyone’s minds at ease regarding their bona fides, Schroy and friends informed clients that a portion of the profits would also be channeled as contributions toward assorted humanitarian causes. Unfortunately the entire story was false; the bank trades were just a ploy, and the only donations ever made were those to Schroy and his co-conspirators’ bank accounts. Despite the lofty aims they advertised, the schemers would simply misappropriate investor funds on luxury cars, vacations, electronics and furniture.

In addition to his sentence, Schroy is required to pay $1,540,044 in restitution.

Universal Pictures

ROBERT SCHROY

  • Age: 68
  • Companies: Worldwide Marketing Network, Jesus Rallies in Chicagoland
  • Job: Network Marketer
  • Scam: International Bank Trades
  • Profits: 10-100% per week
  • Amount of Fraud: $1.5 million
  • Number of Victims: 20
  • Affinity Fraud: Churchgoers
  • Location: Wyckoff, NJ
  • Indictment: Wire Fraud, Tax Evasion
  • Court: US District Court in District of New Jersey

US v. Robert Schroy Information

Robert Schroy Plea Agreement

 

$250 Million Ponzi Scheme Featured Castle Estate

By Michael Hackard on Posted in Ponzi Profiles

chacodoingstuff.blogspot.com

James Koenig of Redding, CA, was convicted yesterday of operating a $250 million Ponzi scheme that victimized upwards of 2,000 investors, many of them senior citizens. A jury in Shasta County Superior Court found Koenig guilty on all but one of over three dozen criminal counts he faced. Koenig’s partner in the fraud, Gary Armitage of Santa Rosa, was sentenced to 10 years in prison last month. Along with fellow Santa Rosan Jeffrey Guidi, Koenig and Armitage were indicted by the State of California in 2009 in the wake of the scheme’s collapse.

From 1997 to 2009, Koenig headed Asset Real Estate & Investment Company (AREI), a firm that oversaw dozens of senior housing and residential assisted-living centers. Koenig & co. told investors these complexes served as a safe and lucrative means for tax-sheltered property exchanges. After AREI would buy an assisted-living home, Koenig would then divvy up shares of the given facility to clients. However, the senior centers were not the profitable investment vehicle that Koenig claimed them to be, as they were incurring losses and defaulting on obligations. By May of 2007, California state DOJ investigators established, AREI was already an insolvent enterprise.

Koenig and Armitage would sustain the scam by encouraging thousands of investors to sink their money into AREI, funds the men would then pay out as fictitious interest. Rewarding themselves for their financial creativity, they also spent clients’ cash on a Lear jet, luxury vehicles and an 80-acre estate complete with a castle in the mountains outside of Redding. Victims were even convinced to refinance their homes and open retirement accounts to foot the bill for the fraudsters’ lifestyle.

Interestingly, Koenig himself is alleged to have been scammed by a Florida woman he met on Match.com. Mary Ann McCall settled into the Ponzi engineer’s residence on upscale Fleming Island outside of Jacksonville by telling him she had terminal cancer, a false claim local prosecutors say she had made several times before in order to score free goodies from well-wishers. Koenig, meanwhile, could face up to 50 years in prison for his charges; he will be sentenced June 11th.

 

khsltv.com

JAMES KOENIG

  • Age: 60
  • Companies: Asset Real Estate Investment
  • Job: Broker
  • Alleged Scam: Investment in Senior Care Properties
  • Profits: 8-12% per year
  • Amount of Fraud: $250 million
  • Number of Victims: 2,000
  • Affinity Fraud: Senior Citizens
  • Location: Redding, CA
  • Indictment: 40 Counts of Fraud; 37 Counts of Residential Burglary
  • Court: CA Superior Court in Shasta County

 

Man Accused of Dating Women, Ensnaring Them in Showbiz Scam

By Michael Hackard on Posted in Ponzi Profiles

Paramount Pictures

Kissimmee, FL, resident Scott Campbell, 48, has gained some unwanted publicity due to allegations that he has been conning women out of their money after meeting them through internet dating services like Match.com. Campbell was exposed yesterday by Orlando news stations after several victims contacted both law enforcement and the media regarding his exploits. He is said to have defrauded 22 women over the course of the last 18 months, while Brevard County Sherriff’s detectives state he has collected at least $1 million over the past decade.

Representing himself as a music company executive, Campbell runs BDO Records (Bank Deposits Only), an Orlando-based studio supposedly engaged in recording, production and promotions. Heaping on the gravitas, he can be seen pictured with numerous hip-hopping celebrities on BDO’s website. Police investigators say they have established Campbell’s recent methods of operation, which involve contacting women online, setting up dates and then soliciting investments from them for his music business. He seems to have played up his various acquaintances in the entertainment world to create an aura of success, promising unspecified profits from future projects. However, the various initiatives Campbell spoke of never hit the jackpot, and when victims tried to recover their money, he lobbed excuses that the bank had frozen his accounts, or that he himself had been “screwed over.”

Wanna be a star? Bank deposits only! bdorecords.com

News anchors broadcasting the segment said Campbell panicked when he found out it was going to air last night, yet he hasn’t always been so shy with the media. In a 2011 live call to C-Span, Campbell expressed his willingness to pay higher taxes to make America great again:

I really do believe the government should raise taxes to fix the financial hurdles we have coming. But we have to come together as a people- not just a Democrat, Republican or Independent, because this is going to our children’s children’s children…We need to stop talking cuts and dig deeper and come together as a country, because that’s what Americans do. I own a record label in Orlando, Florida, and I am willing to pay 10% more in taxes to get our country where we have to be, and I am not where I want to be financially. But what I do for my country – and that is Scott Campbell from BDO Records in Orlando, Florida.

One must wonder, whose tax money would Campbell actually be paying in this display of patriotism?

musicxray.com

SCOTT CAMPBELL

  • Age: 48
  • Company: BDO Records
  • Job: Music Label Executive
  • Alleged Scam: Recording Studio, Promotions
  • Profits: Unspecified
  • Ponzi Time: Last Decade
  • Affinity Fraud: 40-Something Single Women
  • Number of Victims: 22
  • Amount of Fraud: $1 million
  • Location: Orlando, FL