Ponzi Scheme

Joel Barry Gillis and Edward Wishner, two San Fernando Valley businessmen were charged this week with operating a Ponzi scheme that lasted fifteen years. Authorities believe the two received hundreds of millions of dollars from investors who believed their funds would be used to buy profitable automated teller machines. Gillis and Wishner face federal conspiracy as well as mail and wire fraud charges relating to the loss of over $100 million by almost two thousand investors. The two operated Nationwide Automated Systems Inc. out of Calabasas, California. The company claimed to place, operate, and maintain ATMs in high-traffic locations, including hotels, casinos, and convenience stores. It also purported to operate more than 30,000 ATMs and was involved in over a billion dollars in ATM transactions each month. Allegedly, Gillis and Wishner told their investors that the company would lease back the ATMs and pay the investors fifty cents for each transaction performed at their particular machine, guaranteeing annual returns of [...]

JoAnn Crupi, the ex-Bernard Madoff aide who maintained the bank account for Madoff's investment business was sentenced to six years imprisonment this week for her participation in Madoff's Ponzi scheme that bilked investors from across the globe out of approximately twenty billion dollars. Crupi is now the fifth and final former Madoff aide to receive a somewhat lenient penalty subsequent to her March conviction on conspiracy, securities fraud, as well as other charges. Additionally, Crupi was found to be jointly liable for over $39.3 billion in forfeitures, corresponding to her portion of the responsibility for the customer funds, bank loans and other cash fraudulently acquired after January 2002. U.S. District Judge Laura Taylor Swain ruled that Crupi knew or should have known about the scheme by that date. Judge Swain denied bail for Crupi pending a possible appeal. Swain further ordered Crupi to surrender herself on February 26 and recommended that she serve her sentence at a minimum-security federal camp [...]

On November 3, Charles Bennett of Manhattan, New York jumped into the Hudson River in an attempt to commit suicide but was ultimately rescued by a New York Police Department SCUBA diver and taken to a hospital. Before the suicide attempt, however, Bennett had written a sixteen page suicide note, which he left in a hotel on the West Side and was recovered by the police. The note was entitled "A Sad Ending to My Life." In the note, Bennett stated, “I have systematically over the course of five years or so perpetrated a huge Ponzi scheme envelloping [sic] my family and closest friends. I managed to completely squander the hard earned money that my family and dear friends managed to set aside over the course of their working lives. To be clear about this: the whole . . . investment scheme that so many thought was real was in fact a complete and [sic] fiction of my crazed imagination.” [...]

Earlier this week, a federal judge in Sacramento, California sentenced James Berghuis for operating a Ponzi scheme that bilked friends, family, and others out of over $2.7 million. Berghuis was found guilty of four counts of mail fraud, four counts of wire fraud, and one count of money laundering in connection with the operation. According to U.S. Attorney Benjamin Wagner, Berghuis persuaded investors to take out home-equity loans to make investments from 2005 to 2008, claiming that he would use the funds to invest in real estate. He also offered several victims a deed of trust on his commercial property, promising each that they would be in second position on the title. However, Berghuis never used the money for his stated purposes and instead used funds from new investors to pay back earlier investors, the classic element of a Ponzi scheme, as well as to purchase luxury items for himself. Berghuis would make a series of excuses to investors as [...]