McGuireWoods’ Ponzi Litigation team launched its Ponzi Perspectives blog in early 2021 to track key decisions and new cases in Ponzi civil and criminal litigation. Ponzi Perspectives focuses on cases and decisions that have the potential to influence controlling law on Ponzi-related issues. The blog also offers analysis of key decisions and practical considerations when
Continue Reading… Ponzi Perspectives: 2021 Year-End Roundup
New Complaint – Fiene v. Schweinzger
Christian Fiene and Erik Kiser v. Matthew Schweinzger was filed in the Northern District of Illinois on October 27, 2021, seeking damages of more than $500,000 for state statutory and common law claims related to the Defendant’s role in a Ponzi scheme orchestrated by Zachery Horwitz and his company, 1inMM Capital, LLC (the “Horwitz Scheme”).
The Horwitz Scheme defrauded investors by representing that proceeds from each promissory note placed in 1inMM’s offering were going to be used to purchase the rights of particular movies, which would then be licensed to major streaming services such as HBO and Netflix. However, Horwitz and 1inMM had no relationship with HBO or Netflix and had no plans to license any movie rights to those companies.
Plaintiffs Fiene and Kiser are two individuals who were duped into investing into the Horwitz Scheme. Defendant Schweinzger, the Plaintiffs’ former college classmate, is a principal of JJMT Capital, LLC (“JJMT”), which Plaintiffs allege was created for the sole purpose of selling promissory notes to fund the Horwitz Scheme’s fake film licensing deals. JJMT was paid 15% commission on each investment.
New Complaint – SEC v. Bullard, et al.
SEC v. Bullard, et al. is a new complaint filed by the SEC in the District of Minnesota on August 27, 2021. The complaint alleges Jason Dodd Bullard and his wife Angela Romero-Bullard (the “Bullards”), the owners of Bullard Enterprises LLC (collectively “Defendants”), defrauded around 200 investors of approximately $17.6 million as part of a Ponzi scheme where the Bullards falsely claimed investors funds would be used to trade foreign currencies. The complaint alleges Defendants violated Section 17(a) of the Securities Act and Section 10(b) and Rule 10-b-5 of the Securities Exchange Act.
Continue Reading… New Complaint – SEC v. Bullard, et al.
Ponzi Schemes: A Growing Hazard in Film Financing
Ponzi schemes focused on fake investment opportunities are nothing new. Bernie Madoff, Allen Stanford and Tom Petters are now household names. But there has been a particular rise of Ponzi schemes specifically in the film and video content industry that has intensified in the last few years.
As streaming services vie for dominance in the frenzied content wars in an effort to draw in more and more viewers, this trend is likely to accelerate. These streaming services will spend tens of billions of dollars this year alone creating and acquiring video content.[1]
These conditions create a perfect breeding ground for Ponzi schemes, given the amount of money changing hands and the lax due diligence standards investors sometimes accept in exchange for the chance to tap into this hot market.
In the last year alone, the largest film financing Ponzi scheme in U.S. history collapsed, and these schemes spread to overseas markets, like China.
Continue Reading… Ponzi Schemes: A Growing Hazard in Film Financing
New Complaint – SEC v. Horwitz
The SEC filed SEC v. Horwitz in the Central District of California on April 5, 2021, alleging that Defendant Horowitz violated federal securities laws in connection with fraudulent promissory notes issued by Horwitz’s company. Specifically, the complaint alleges violations of Sections 17(a) of the Securities Act, 10(b) of the Securities Exchange Act, and 10b-5 of the Exchange Act Rules.
Defendant Horwitz was the owner and operator of Defendant 1inMM, which purported to be a company in the business of obtaining distribution rights to certain movies in order to license those rights to media companies like Netflix and HBO.
Personal Jurisdiction – An Effective Defense As Illustrated by the Southern District of New York in Dismissing Ponzi Litigation
In a recent decision in Anderjaska v. Bank of America, N.A., et al., the Southern District of New York decided that three national banks were not subject to general jurisdiction in New York for allegedly aiding and abetting a Ponzi scheme.
Anderjaska highlights the utility of procedural mechanisms when defending against Ponzi-related allegations in a forum where a bank neither has its principal place of business nor its place of incorporation. Such procedural tools should not be overlooked as a means to defend litigation.
New Complaint – Elghossain v. Bank of Audi, et al.
Elghossain v. Bank of Audi, et al. was filed in the Southern District of New York on March 11, 2021, claiming that Plaintiffs were victims of a Ponzi scheme within the Lebanese banking system.
Plaintiffs are a married couple—both citizens and residents of the United States. The defendants are two Lebanese banks, Bank Audi and Banque Du Liban.
Continue Reading… New Complaint – Elghossain v. Bank of Audi, et al.
New Complaint – Peters v. Gallun, et al.
Peters v. Gallun, et al. was filed in the Central District of California on February 18, 2021, claiming civil damages for violations of securities law, breach of contract, and conversion.
Plaintiff is an individual working as a movie producer in California (“Peters”). The defendants are an individual acting as a business manager and equine sales agent (“Gallun”) and Gallun’s limited liability company.
New Complaint – EHC Aspen Properties, LLC v. CCUR Holdings, Inc., et al.
EHC Aspen Properties, LLC v. CCUR Holdings, Inc., et al. was filed in the Superior Court of California for Orange County on March 15, 2021, asserting that the Defendants coerced Plaintiff into investing in an aircraft financing Ponzi scheme.
Plaintiff is limited liability company in California managed by Luis Serrano. The defendants are three entities—CCUR Holdings, Inc., CCUR Aviation Finance, LLC, and JDS1, LLC—and an individual, Igor Volshteyn.
Continue Reading… New Complaint – EHC Aspen Properties, LLC v. CCUR Holdings, Inc., et al.
New Complaint – Ebury Street Capital, LLC, et al. v. McOsker, et al.
Ebury Street Capital, LLC, et al. v. McOsker, et al. was filed in the United States District Court for the District of Delaware on February 12, 2021, claiming civil damages for an alleged $3.5 million Ponzi scheme perpetrated by the defendants.
Plaintiffs are entities in the business of buying tax lien certificates, and defendants are individuals and entities who purported to be legitimate brokers and market-makers for the selling and trading of tax lien certificates.
Continue Reading… New Complaint – Ebury Street Capital, LLC, et al. v. McOsker, et al.