Ponzi Scheme

Donald Ray Babb of Merritt Island, Florida and Ralph Ruth of Melbourne, Florida pleaded guilty earlier this week to conspiracy to commit wire fraud in connection to a Ponzi scheme they ran that defrauded local investors out of almost $19 million. The alleged co-conspirators each face a maximum sentence of twenty years in federal prison. Babb and Ruth are alleged to have collected cash to pay other investors as well as purchasing real estate and other luxury items for themselves. The U.S. Department of Justice is asking for restitution in the amount of $18.7 million and the forfeiture of a number of properties, including houses in Melbourne, Merritt Island, and North Carolina. The co-conspirators are believed to have done business as Southeast Mutual Insurance and Investment LLC, Capstar Industries LLC, and First Merchant Capital LLC and falsely represented their businesses as licensed financial institutions whose deposits were insured by the Federal Deposit Insurance Corp. The two used these businesses to [...]

James Peister, an investment fund manager from St. James, New York, pleaded guilty in federal court this week to securities fraud, having run a Ponzi scheme that lasted almost a decade and bilked investors out of over $17 million. Peister will pay $9.6 million in restitution to his victims and will concede $17.9 million in assets, including his home and a Hummer. According to Loretta Lynch, U.S. Attorney for the Eastern District of New York, “For nearly a decade, rather than make sound investment decisions as he had promised, James Peister fleeced dozens of investors and used their money to fund his own lavish lifestyle.” Prosecutors believe that Peister defrauded more than 74 investors between January 2000 and June 2009 through a number of investment funds, including Northstar International Group, Inc., North American Globex Group, and North American Globex Fund, LP. Peister represented to his victims that they would be investing in stocks, futures, and fixed income instruments. Rather, Peister [...]

Luis Serna, formerly a pastor at Zion Living Word Christian Center in San Fernando, California, was sentenced today to over ten years in a federal prison for operating a $7 million Ponzi scheme that congregants, community members, and their families were duped into funding. In whole, 82 victims were bilked out of about $4.6 million over three years. Serna is believed to have used his position as pastor to prey on low income, Spanish-speaking victims. He pleaded guilty to one count of wire fraud in August and noted in his plea deal that in or around 2006 he started soliciting loans from his congregation and the community through his company, Architects of the Future Investments. He represented to his victims that he was a successful investor in foreign currencies and offered them returns between four and twenty percent annually for giving him their life savings and mortgaging their homes. In reality, Serna invested little of the money, if any at [...]