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Tag: ponzi schemes

  • He hasn’t played in MLB for more than two decades. One team is paying him $1.2 million a year until 2035 | CNN

    He hasn’t played in MLB for more than two decades. One team is paying him $1.2 million a year until 2035 | CNN

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    CNN
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    He hasn’t picked up a professional baseball glove in 22 years but he’s still picking up a paycheck – and a hefty one at that.

    It’s July 1, which for New York Mets fans means it’s Bobby Bonilla Day.

    The former slugger retired in 2001 with the St. Louis Cardinals, but he has been collecting a check of nearly $1.2 million from the Mets every year on July 1 for more than a decade.

    The deal is part of a contract negotiated by Bonilla’s agent Dennis Gilbert, which will pay Bonilla $1,193,248.20 every year until 2035. Bonilla, a former All-Star who last played with the Mets in 1999, will be 72 when his contract with the team expires.

    How was Gilbert able to secure such a sweet deal for his client? They can both thank disgraced financier Bernie Madoff and Mets owner Fred Wilpon.

    The Mets wanted to part ways with Bonilla in 1999, but he had $6 million left on his contract. Wilpon believed he was getting a huge return on his investments through Madoff but the Mets owner turned out to be a victim of Madoff’s infamous Ponzi scheme

    Instead of paying Bonilla outright, Wilpon opted to defer payments so that the money could be unwittingly invested into Madoff’s Ponzi scheme.

    Gilbert negotiated with the team to defer payments until 2011, with an 8% annual interest rate.

    Madoff was the mastermind of the most notorious Ponzi scheme in history. A Ponzi scheme is a form of fraud that uses funds from more recent investors to pay profits to earlier investors, leading them to believe that their investments are part of a successful enterprise.

    Madoff is serving 150 years in prison for the multibillion-dollar scheme that he ran for decades.

    In total, Bonilla will walk away with a $29.8 million payday because of Wilpon’s blunder.

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  • California man sentenced to over 6 years in prison for $8.7 million cow manure Ponzi scheme, US attorney’s office says | CNN Business

    California man sentenced to over 6 years in prison for $8.7 million cow manure Ponzi scheme, US attorney’s office says | CNN Business

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    CNN
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    A man from California who ran a multimillion-dollar fraud scheme where he claimed to turn cow manure into green energy has been sentenced to over six years in prison, the US attorney’s office for the Eastern District of California announced this week.

    Ray Brewer, 66, stole over $8.7 million from investors, court records from between March 2014 and December 2019 showed.

    Brewer’s scam involved convincing investors he could build anaerobic digesters – large machines that create methane through microorganisms breaking down biodegradable material – on dairies in several California and Idaho counties, the US attorney’s office said in a news release. This methane can “then be sold on the open market as green energy,” the release stated.

    Brewer’s investors were meant to receive tax incentives and 66% of all net profits as part of the scheme, authorities said.

    Brewer gave the investors tours of the dairies where he claimed he’d build the digester machines and “sent them forged lease agreements with the dairy owners,” according to the US attorney’s office release.

    “He also sent the investors altered agreements with banks that made it appear as though he had obtained millions of dollars in loans to build the digesters,” the release said.

    Wanting to appear as though he had secured revenue streams, Brewer also sent investors forged contracts with multinational companies, authorities said, and showed them fake photos of the digesters under construction.

    After receiving investors’ funds, authorities said he transferred the money to bank accounts opened in the names of an alias, his relatives and different entities.

    In some cases, Brewer offered refunds that came from “newly received money from other investors who had not authorized Brewer to use their money in this way,” the US attorney’s office said.

    Brewer assumed a new identity and relocated to Montana after his investors became aware of his fraud, authorities said.

    When he was arrested, Brewer attempted to trick authorities by telling him they had the wrong person.

    He also told officers stories about being in the Navy and “how he once saved several soldiers during a fire by blocking the flames with his body so that they could escape” – tales he later admitted were lies “meant to curry favor with law enforcement,” the news release stated.

    Some of Brewer’s purchases with the stolen money included two plots of land of 10 or more acres, a custom 3,700 square-foot home and new pickup trucks, according to authorities.

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  • Who Was Charles Ponzi? The Shocking Story Behind the Scheme. | Entrepreneur

    Who Was Charles Ponzi? The Shocking Story Behind the Scheme. | Entrepreneur

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    In 1903, a penniless Italian immigrant with a gambling problem arrived in Boston with dreams of making it big in America. His name was Charles Ponzi.

    Standing 5’2 and weighing 130 pounds, the diminutive man may not have been imposing, but he made up for it with his ambition. Ponzi would ultimately invent the most elaborate investment scheme ever perpetrated at the time, earning him the equivalent of $220 million in just a few years.

    How did this happen, and what was the fate of the man immortalized forever for perpetrating the ultimate money con?

    On this week’s episode of Dirty Money, Entrepreneur editors Dan Bova and Jon Small tell the mostly forgotten story of the man behind the original Ponzi scheme. Charles Ponzi’s classically American tale is about ambition, greed, ingenuity, and hubris. There’s a reason they named a con after this guy.

    Rags to riches

    Like so many newcomers to the U.S., Ponzi honestly believed that the city streets were paved with gold. All you had to do was stoop down and shovel it into bags.

    But that didn’t work out for him. Ponzi traveled America taking odd jobs as a grocery clerk, factory hand, dishwasher, sewing machine repairman, nurse, insurance salesman, and sign painter. He was always scribbling ideas for businesses in his notebook. He was broke, in and out of jail, and most people thought he was a joke.

    The laugh was on them. In 1919, Ponzi pawned his wife’s jewelry to open up the Securities Exchange Company, promising investors a 50% return on their investment within 45 days or a 100% return within 90 days. He told them he could do this by exploiting the difference in international postal reply coupons’ value.

    Ponzi became very rich and famous — very quickly.

    But just as fast as Ponzi built his empire, everything came crashing down.

    What is a Ponzi scheme?

    A Ponzi scheme is an investment scheme where the returns are paid to earlier investors using the money contributed by newer investors. The scheme often relies on attracting a large number of investors and promising them high returns with little or no risk. The returns are usually paid from the investments made by newer investors rather than from legitimate profits earned by the scheme.

    Charles Ponzi didn’t invent this scheme, but he perfected it, laying the groundwork for even bigger scammers in the future — such as Bernie Madoff, who stole $50 billion.

    Ponzi always dreamed he’d be the talk of the town. But he never imagined his name would forever be associated with a scam.

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    Jonathan Small

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  • George Santos said accused ‘Ponzi scheme’ he worked at was ‘100% legitimate’ when accused of fraud in 2020 | CNN Politics

    George Santos said accused ‘Ponzi scheme’ he worked at was ‘100% legitimate’ when accused of fraud in 2020 | CNN Politics

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    CNN
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    Republican Rep. George Santos, said a company later accused of running a “Ponzi scheme” was “100% legitimate” when it was accused by a potential customer of fraud in 2020, more than a year before it was sued by the US Securities and Exchange Commission. Once the company, where he worked, came under federal scrutiny, Santos claimed publicly that he was unaware of accusations of fraud at the firm, a CNN KFile review of Santos’ social media and statements found.

    Santos, the embattled freshman Republican, faces growing pressure to resign after he lied and misrepresented his educational, work and family history, including falsely claiming he was Jewish and the descendant of Holocaust survivors. Santos admitted to “embellishing” his resume, but has maintained he is “not a criminal.”

    Santos worked at Harbor City Capital Corp. in 2020 and 2021, a company the SEC said was a “classic Ponzi scheme” in an April 2021 complaint against the firm. A Ponzi scheme is a type of fraud where existing investors are paid with funds from new investors, often promising artificially high rates of return with little risk. Santos was not named in the SEC complaint.

    Joseph Murray, an attorney for Rep. Santos, told CNN in an email on Thursday that Santos was unaware of wrongdoing at the company.

    “As to any questions about Harbor City Capital, in light of the ongoing investigation, and for the benefit of the victims, it would be inappropriate to respond other than to say that Congressman Santos was completely unaware of any illegal activity going on at Harbor City Capital,” Murray told CNN.

    Santos told The Daily Beast in 2022 that he was “as distraught and disturbed as everyone else” to learn of allegations against Harbor City. But in a since-removed tweet on his since-deleted personal Twitter account, a potential customer questioned claims the company had a 100% bank guarantee on their investment in the form of a stand by line of credit (SBLC).

    “The market instability is leading to sever (sic) capital erosion. @HarborCityCap offers you a strategy that mitigates loss and risk while creating cash flow, meanwhile your principle is 100% secured by an SBLC held by various major institutions. #fixedincome #alternativeinvestment #win,” Santos tweeted in April 2020 under the name George Devolder, using his mother’s family name.

    In June, a potential customer responded to that tweet from Santos saying he looked into a SBLC from Harbor City and found it to be fraudulent.

    “George, this SBLC I received from Harbor City was looked into, and Deutsche Bank claims is a complete fraud and not signed by the bank officer on the document. How do you explain this?,” the user said.

    “I’m sorry I’m not following you. Could you please send me an email at George.devolder@harborcity.com and we can go over this together. Our SBLC is 100% legitimate and issued by their institution. I look forward to hearing from you,” responded Santos.

    In fact, according to the SEC complaint, “at no point” was Harbor City Capital “ever issued a SBLC,” despite claims from the company.

    Dylan Riddle, a spokesman for Deutsche Bank, told CNN on Monday that they had no affiliation with Harbor City Capital.

    “Harbor City Capital was not a client of Deutsche Bank,” he said.

    Attorney Katherine C. Donlon, the court-appointed receiver for Harbor City Capital told CNN in an email on Friday Santos was affiliated with Harbor City Capital from mid January 2020 through April 2021.

    On Wednesday, the Nassau County GOP and several New York Republican congressmen called on Santos to resign. Santos still has the tacit support of House Speaker Kevin McCarthy, who said it was up to the voters to decide.

    In other media reviewed by CNN’s KFile from 2020, Santos called himself “the head guy” at the Harbor City office in New York and the executive at the company. In one 2020 interview, Santos said he managed a $1.5 billion fund for the company with returns of 12% and 26% on investors’ money.

    “Currently at Harbor City Capital, I manage a 1.5 billion fund, right?,” said Santos. “And I know how to manage it well. I give record returns to anybody who watches this, they’ll understand. I’m giving, a 12% fixed yield income return a year, which nobody in the market’s giving four and we’re giving 12. We’re also giving up to 20 to 26% in IRR return on our investors’ capital. So if there’s something I know how to do, it’s manage dollars and grow them.”

    The SEC filed a complaint in April 2021 against Harbor City Capital and founder Jonathan P. Maroney, alleging that Maroney raised $17.1 million by deceiving more than 100 hundred investors through a series of unregistered fraudulent security offerings and used the money to enrich himself and his family. The SEC claimed that of the investor money collected and deposited into Harbor City Capital bank accounts “at most” only $449,000 were used for business expenses.

    Neither Santos nor other Harbor City Capital employees were named in the complaint.

    In October, Maroney was granted a stay in federal court for the SEC’s civil lawsuit, after Maroney noted that he “is currently the target in a related criminal investigation.” He is representing himself in the case.

    CNN reached out to Maroney for comment but did not receive a response.

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