Notable litigation filed during July 2024 includes: (1) SEC v. Kralik, et al., No. 24-cv-01460 (C.D. Cal.); (2) Yang, et al. v. Fei, et al., No. 24-cv-05055 (S.D.N.Y.); (3) Mentink, et al. v. Rowe, et al., No. 24-cv-02047 (D.D.C.); (4) Osprey Investment, Inc. v. Sawyer, et al., No. 24-cv-443476 (Cal. Super. Ct.); (5) Sharma, et al. v. Nambiar, et al., No. 24-cv-443175 (Cal. Super. Ct.); (6) Vazquez, et al. v. Snyder, No. 2024-013332-ca (Fla. Cir. Ct.); and (7) two separate actions targeting the same scheme, captioned Hafen v. Ault, et al., No. 24-cv-00546 (D. Utah) and Hafen v. Flint Farms Trust, et al., No. 24-cv-00545 (D. Utah).
SEC v. Kralik, et al., No. 24-cv-01460 (C.D. Cal.)
The SEC filed suit in California federal court against defendant schemers for losses arising from an alleged $16 million real estate investment Ponzi scheme . The complaint alleges defendants ensured investors that their capital would be preserved while receiving payments on the profits derived from renovating or renting the properties, but defendants allegedly transferred victims’ funds and utilized them for personal use instead. The SEC alleges violations of the Securities Exchange Act and Securities Act and seeks permanent injunctive relief to prevent future violations of federal securities laws, disgorgement of ill-gotten gains, interest, and civil penalties.
Yang, et al. v. Fei, et al., No. 24-cv-05055 (S.D.N.Y.)
Victims filed suit in New York federal court against schemers for an alleged multi-million-dollar Ponzi scheme targeting Chinese-speaking shoppers. Defendants allegedly marketed a program where shoppers could deposit funds with the defendants, and in turn the shoppers could buy goods online at a steep discount. The complaint alleges these purported discounts, which defendants ensured would be greater than or equal to the initial deposit, were to be refunded after defendants invested shoppers’ principal funds. Plaintiffs allege defendants engaged in racketeering, conspiracy to racketeer, and money laundering and seek compensatory and punitive damages, attorneys’ fees, and a permanent injunction to prevent similar enterprises and schemes.
Mentink, et al. v. Rowe, et al., No. 24-cv-02047 (D.D.C.)
Victims of an alleged Ponzi scheme filed suit in the District of Columbia federal court against defendant schemers who offered safe investments in promissory notes secured by a third-party guarantor. The complaint alleges defendants collected $70 million from investors but the purported notes were not secured through any meaningful collateral as the alleged guarantor was insolvent throughout the scheme, citing a related bankruptcy action involving the third party. Plaintiffs assert violations of Wisconsin and Texas securities law, unfair business practices, and misrepresentations to customers, and the Securities Exchange Act, and they seek to recover the amounts promised by the promissory notes.
Osprey Investment, Inc. v. Sawyer, et al., No. 24-cv-443476 (Cal. Super. Ct.)
Following another action previewed by Ponzi Perspectives this May, a plaintiff initiated an action in California state court against defendant schemers who purported to offer investments in short-term promissory notes to fund high-interest bridge loans to various businesses. The complaint alleges defendants induced plaintiff to “roll” her principal into new investment positions and, when she attempted to redeem her funds, defendants made excuses and eventually refused to repay the initial investment funds totaling over $44 million. Accordingly, plaintiff asserts claims for violations of California law, breach of contract, the implied duty of good faith and fair dealing, fraud, negligent misrepresentation, conversion, conspiracy, and unjust enrichment and seeks declaratory relief, compensatory damages, attorney’s fees, specific performance, punitive and consequential damages, and emotional distress damages.
Sharma, et al. v. Nambiar, et al., No. 24-cv-443175 (Cal. Super. Ct.)
Investors in an alleged Ponzi scheme filed suit in California state court against alleged schemers claiming defendants induced plaintiffs to invest funds using falsified financial records and investor success stories. Plaintiffs allege violations of the California penal code, fraud, conspiracy, breach of contract, conversion, and unjust enrichment and seek relief in the form of immediate possession of the investment funds, the value of the property converted, actual damages, compensatory damages, punitive damages, treble damages, interest, and attorneys’ fees.
Vazquez, et al. v. Snyder, No. 2024-013332-ca (Fla. Cir. Ct.)
Victims of an alleged Ponzi scheme sued defendant schemer in Florida state court. The complaint alleges defendant acted as the scheme’s “closing agent” by preparing and distributing loan documents to plaintiffs as well as disbursing over $50 million which investors believed were being used to purchase auto portfolio loans. Plaintiffs seek compensatory damages, interest, and attorney’s fees for breach of fiduciary duty, negligence, and legal malpractice .
Hafen v. Ault, et al., No. 24-cv-00546 (D. Utah); Hafen v. Flint Farms Trust, et al., No. 24-cv-00545 (D. Utah)
A court-appointed receiver filed two lawsuits in Utah federal court against “net winners” who received fictitious profits from the “Silver Pool Ponzi Scheme” operated by Gaylen Rust, his family, and their companies which are subject to the receivership action. While promising significant returns through purchasing, storing, and selling physical silver for investment, the Silver Pool Ponzi Scheme instead misappropriated funds to make payments to other investors, including the defendants. The complaint alleges that defendants received payments greater than their investments with the scheme, and the receiver asserts claims for voidable transfer, unjust enrichment, and breach of contract.