Category: Ponzi Schemes

A Ponzi Schemes are fraudulent investment scams where returns to existing investors are paid with funds from new investors rather than from profits generated by the investment. The scheme typically attracts investors by promising high returns with little or no risk. Initially, early investors may receive payouts, encouraging them to invest more or to attract others. However, as the scheme grows, the operator struggles to find enough new investors to pay earlier investors, leading to collapse. Ponzi schemes rely on a continuous influx of new participants to sustain the illusion of profitability and payouts. When the scheme unravels, investors often lose their money as the promised returns are unsustainable and the operator absconds with remaining funds. Regulatory authorities vigorously pursue and prosecute Ponzi scheme operators due to their inherent deceit and harm to investors.

SEC-PR-2024-88

Categories Investment Fraud Misleading Investors Ponzi Schemes SEC-2407
SEC NEWS - SEC-PR-2024-88SEC-PR-2024-88 (JUL. 25, 2024)
PRESS RELEASE | SEC-PR-2024-88

Securities and Exchange Commission Charges Virginia Engineer with Orchestrating $30 Million Offering Fraud

Washington D.C., July 25, 2024 — The Securities and Exchange Commission today charged Babu Ramaraj, a resident of Aldie, Virginia, with defrauding more than 70 investors of approximately $31 million through his company, DAB Inspection and Consulting Services LLC.

The SEC’s complaint alleges that, from February 2019 through May 2024, Ramaraj solicited and lured his victims with the promise of 40-60 percent annual investment returns. According to the complaint, Ramaraj falsely told investors that he would use their funds to finance surety and performance bonds for large-scale, lucrative contracts DAB had been awarded to provide quality assurance services to state and local governments. Ramaraj allegedly created fake contracts and financial documentation to support his misrepresentations. The SEC alleges that, in reality, the contracts never existed, and Ramaraj instead used investor funds to purchase luxury automobiles, jewelry, and property, engage in unprofitable options trading, and pay earlier investors.

“As we allege, Ramaraj promised his investors unrealistic returns from government contracts he never had and then used their money to fund his own lifestyle and to make Ponzi-like payments to maintain the deception,” said Scott A. Thompson, Associate Director of Enforcement in the SEC’s Philadelphia Regional Office. “We will continue to hold accountable those who exploit investors’ trust for personal gain.”

The SEC’s complaint, filed in the United States District Court for the Eastern District of Virginia, charges Ramaraj with violating antifraud provisions of the federal securities laws and seeks an injunction, disgorgement, penalties, and an officer-and-director bar.

In a parallel action, in June 2024, the U.S. Attorney’s Office for the Eastern District of Virginia announced criminal charges against Ramaraj for wire fraud and unlawful monetary transactions. Those charges are pending.

The SEC’s investigation was conducted by Christine R. O’Neil, Matthew B. Homberger, and Michael A. Cuff in the Philadelphia Regional Office. It was supervised by Brian R. Higgins, Brendan P. McGlynn, Mr. Thompson, and Nicholas P. Grippo. The SEC’s litigation will be led by Karen M. Klotz and Judson Mihok and supervised by Gregory R. Bockin. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of Virginia, the FBI, and the Virginia State Corporation Commission.

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CFTC-PR-8931-24

Categories Commodity Fraud Misappropriation  Ponzi Schemes

CFTC Notices - CFTC-PR-8931-24File ID:  CFTC-PR-8931-24

Date:  July 3, 2024

Accessed:  July 8, 2024

Headline:  Federal Court Enters Summary Judgment Against Oregon Man and Orders $83 Million in Restitution for Fraud Victims

Source:  https://www.cftc.gov/PressRoom/PressReleases/8931-24

Categories:

  • COMMODITY FRAUD
  • MISAPPROPRIATION
  • PONZI SCHEME

CFTC-PR-8931-24 – Viewer: ▼▼▼ (Download PDF File ⊗)

CFTC-PR-8931-24

SEC-PR-2024-35

Affinity Fraud Categories Crypto Investment Fraud Forex Investment Fraud Frauds Targeting Latino Americans Ponzi Schemes SEC-2403
SEC NEWS - SEC-PR-2024-35SEC-PR-2024-35 (MAR. 14, 2024)
PRESS RELEASE | 2024-35

SEC Charges 17 Individuals in $300 Million Crypto Asset Ponzi Scheme Targeting the Latino Community.

Washington D.C., March 14, 2024 — The Securities and Exchange Commission today charged 17 individuals for their roles in a $300 million Ponzi scheme that involved Houston, Texas-based CryptoFX LLC and targeted more than 40,000 predominantly Latino investors in the U.S. and two other countries. Today’s complaint follows the SEC’s successful emergency action ⊗ in September 2022 that halted the CryptoFX scheme and charged its two main principals, Mauricio Chavez and Giorgio Benvenuto.

“We allege that CryptoFX was a $300 million Ponzi scheme that targeted Latino investors with promises of financial freedom and life-altering wealth from ‘risk free’ and ‘guaranteed’ crypto and foreign exchange investments,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “In the end, the only thing that CryptoFX guaranteed was a trail of thousands upon thousands of victims stretching across ten states and two foreign countries. A scheme of that size requires lots of participants, and as today’s action demonstrates, we will pursue charges against not just the principal architects of these massive schemes, but all those who further their fraud by unlawfully soliciting victims.”

“After filing the initial charges in this case and obtaining emergency relief, we continued our investigation to identify additional individuals who allegedly played roles in this massive Ponzi scheme,” said Eric Werner, Director of the SEC’s Fort Worth Regional Office. “Our efforts bore significant fruit as the charges and allegations today demonstrate.”

According to the SEC’s complaint, CryptoFX purported to trade in crypto asset and foreign exchange markets for investors but was in reality a Ponzi scheme. The SEC’s complaint alleges that, from May 2020 to October 2022, the 17 charged individuals from Texas, California, Louisiana, Illinois, and Florida, acted as leaders of the CryptoFX network and solicited investors by variously promising that CryptoFX’s crypto asset and foreign exchange trading would generate returns of 15 to 100 percent. The complaint alleges that CryptoFX raised $300 million from investors but did not use most of the funds for its claimed trading purposes. Instead, the defendants allegedly used investor funds to pay supposed returns to other investors, to pay commissions and bonuses to themselves and investors, and to fund their own lifestyles. The complaint further alleges that two of the defendants, spouses Gabriel and Dulce Ochoa, continued to solicit investments after the court issued orders to halt the CryptoFX scheme in September 2022, and Gabriel Ochoa instructed two investors to rescind their complaints to the SEC for them to recover their investments. Another defendant, Maria Saravia, allegedly told investors that the SEC’s lawsuit was fake.

The SEC’s complaint, filed in U.S. District Court for the Southern District of Texas, charges Gabriel and Dulce Ochoa, Saravia, Gloria Castaneda, Ismael Zarco Sanchez, and Roberto Zavala with violating the antifraud, securities-registration, and broker-registration provisions of the federal securities laws. The complaint charges Gabriel Arguelles, Hector Aquino, Orlin Wilifredo Turcios Castro, Carmen De La Cruz, Elizabeth Escoto, Reyna Guiffaro, Marco Antonio Lemus, Juan Puac, Luis Serrano, Julio Taffinder, and Claudia Velazquez with violating the securities-registration and broker-registration provisions. In addition, the complaint charges Gabriel Ochoa with violating the whistleblower protection provisions. The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against each defendant.

Without admitting or denying the allegations in the SEC’s complaint, Serrano and Taffinder consented to the entry of final judgments, subject to court approval, that permanently restrain and enjoin them from violating the securities-registration and broker-registration provisions of the federal securities laws. Serrano and Taffinder agreed to pay more than $68,000 combined in civil penalties, disgorgement, and interest.

The SEC’s investigation was conducted by Jillian Harris, Carol Hahn, and Jamie Haussecker of the Fort Worth Regional Office and was supervised by Jim Etri and B. David Fraser. The litigation is being conducted by Matthew Gulde and supervised by Keefe Bernstein.

If you are an investor in CryptoFX and/or have information related to the CryptoFX scheme and you wish to contact the SEC staff, please reach out to CFXvictims@sec.gov or contact the court-appointed receiver in the SEC’s ongoing action against CryptoFX, Chavez, and Benvenuto, at https://cryptofxreceiver.com, (713) 546-5653, or receivership@shb.com. The SEC encourages investors to check the backgrounds of anyone selling or offering them an investment using the free and simple search tool on https://www.investor.gov/. Investors also can learn more about the risks of investing in unregistered offerings by reading alerts issued by the SEC’s Office of Investor Education and Advocacy.

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Ponzi Schemes

Ponzi Schemes
JCAP101.com - Ponzi Schemes

Article
Ponzi Schemes

Ponzi Schemes are a form of investment scam that lures investors with the promise of high returns and minimal risk. Named after Charles Ponzi, who perpetrated such a scheme in the early 20th century, it operates by using funds from new investors to pay returns to earlier investors, rather than generating profits through legitimate business activities. The scheme relies on a continuous influx of new investments to sustain the illusion of profitability.

Key Characteristics:

  • Unrealistic Returns — These types of schemes promise consistently high returns that are often too good to be true, attracting investors seeking quick profits.
  • Lack of Transparency — The operators provide vague or inconsistent information about the investment strategy, making it difficult for investors to understand how profits are generated.
  • No Genuine Investments — Unlike legitimate investment vehicles, Ponzi schemes do not generate profits through legitimate business activities or investments; they rely solely on the contributions of new investors.
  • Sustainability Issues — Ponzi schemes are unsustainable in the long run as they require a continuous influx of new investors to pay returns to existing ones.

Prevalence:

Ponzi Schemes can emerge in various sectors, including finance, real estate, or even cryptocurrency. They are most prevalent in environments with:

  • Limited Regulation — Regions with lax regulatory oversight can become breeding grounds for Ponzi schemes as perpetrators exploit the lack of scrutiny.
  • Close-Knit Communities — Schemes often target specific communities where trust is high, as individuals are more likely to invest based on personal relationships.
  • Economic Instability — During economic downturns, people may be more susceptible to schemes promising high returns as they seek alternative investment opportunities.

Avoidance:

To avoid falling victim to Ponzi Schemes, individuals should:

  • Conduct Due Diligence — Verify the legitimacy of investment opportunities by researching the company, its track record, and regulatory compliance.
  • Question Unrealistic Returns — Be skeptical of investments promising consistently high returns with little risk, as these are typical characteristics of this type of scheme.
  • Seek Professional Advice — Consult financial advisors or experts before making significant investment decisions to gain insights into the legitimacy of the opportunity.

What to Do if a Victim:

If someone realizes they are a victim of this type of scheme, they should:

  • Cease Further Payments — Stop making additional investments or payments into the scheme immediately.
  • Document Everything — Keep records of all communication, transactions, and any evidence related to the investment.
  • Report to Authorities — Contact relevant regulatory authorities and law enforcement agencies to report the fraud.
  • Seek Legal Advice — Consult with a legal professional to explore potential avenues for recovering lost funds or pursuing legal action against the perpetrators.

Summary:

Ponzi Schemes are investment scams that promise high returns using funds from new investors to pay existing ones. They thrive in environments with limited regulation, target close-knit communities, and take advantage of economic instability. To avoid falling victim, individuals should conduct due diligence, question unrealistic returns, and seek professional advice. If victimized, it is crucial to cease further payments, document all interactions, report to authorities, and seek legal advice.

Education:

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