The United States Government forced online poker sites to the fringes of the financial system. The U.S. government has long argued that online poker gambling is illegal under the Wire Act, a 1961 law that explicitly prohibits sports betting conducted over electronic communication. In 2006, Congress made it illegal for financial institutions to process funds [...]
Tag Archives: Ponzi schemes
The Amish Madoff
The Securities and Exchange Commission filed charges against Monroe L. Beachy, a 77-year-old Amish man from Sugarcreek, Ohio. They found the Bernie Madoff of the Amish. Beachy targeted his fellow Amish in his alleged fraud. He raised more than $33 million from as early as 1986. Beachy enticed investors by promising interest rates that were [...]
The New Face of Evil?
His crime was simple: collect money from investors, fake the returns, pocket the money, and repeat. His crime was the biggest: $20 billion in cash plus $45 billion of fake returns. Should Bernie Madoff be the new name for evil? Christine Hurt of University of Illinois College of Law contrasts Madoff with the original Ponzi [...]
Dealing with Losses From the Madoff Fraud
One of the many repercussions of the Madoff fraud is how to treat investors who had money in his Ponzi scheme. There has been plenty written about how the trustee is treating the direct investors. He is only treating net cash. If you took out more cash than you put in, you are on the [...]
SEC Censure for Failing to Conduct Due Diligence
The SEC censured and fined an investment adviser for due diligence lapses. Yosemite Capital Management, LLC and its managing director, Paul H. Heckler, got a wrist slap for failing to disclose to clients that they had encountered substantial problems when attempting to perform the due diligence. The big problem is that Yosemite had made a [...]
How Did Madoff Go Bad?
Last Friday, the SEC published the exhibits for Investigation of Failure of the SEC to Uncover Bernard Madoff’s Ponzi Scheme (Report No. OIG-509). That was 536 separate exhibits tying to fill in the background on what happened with the SEC and Madoff. The one that caught my eye was exhibit 104 that summarized a June [...]
You’re a Victim of a Ponzi Scheme, But What About Your State Taxes?
You missed the warning signs and got suckered into a Ponzi scheme. The IRS offered some tax relief for long-term Ponzi scheme investors (like some of the Madoff victims) who have paid taxes on gains from the investment. The IRS clarified the federal tax law governing the treatment of losses in Ponzi schemes. They also [...]
Arthur Nadel Indicted
Florida fund manager Arthur Nadel was indicted Tuesday on criminal charges for allegedly soliciting hundreds of millions of dollars in investor money under false pretenses and misappropriating client funds. Mr. Nadel, 76 years old, was charged in a 15-count indictment with mail fraud, securities fraud and wire fraud. “It’s a much more complex story than [...]
Bits and Pieces on Compliance
Here are a few stories and items that caught my eye this week, but I have not had time to build-out to a full post: SEC Speaks on Compliance Issues to Investment Advisers by Joel Beck of BD Law Blog Lori Richards, the Director of the SEC’s Office of Compliance Inspections and Examinations (OCIE) spoke [...]
Ponzimonium, Ponzipalooza, Ponzimania
There is “rampant Ponzimonium.” Or is there a “virtual Ponzipalooza”? Bart Chilton, a commissioner at the Commodities Futures Trading Commission coined these terms in his speech on March 20 before American Bar Association’s Committee on Derivatives and Futures Law Students. Personally, I prefer Ponzimania. The CFTC has filed charges against 15 alleged Ponzi schemes so [...]
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