Schwartz v. McGregor was filed in the District Court of Denver County, Colorado on January 10, 2022, seeking relief under Colorado’s Uniform Fraudulent Transfer Act, C.R.S. § 38-8-101-112 (“CUFTA”), including a turnover and accounting and damages for actual and constructive fraud.

Plaintiff Gary Schwartz is a court-appointed Receiver (“Receiver”) on behalf of a multi-million-dollar fraudulent investment scheme perpetrated by Mark Ray (“Ray”).  The Receiver was appointed over Mark Ray, Custom Consulting & Product Services, LLC, MR Cattle Production Services, LLC, Universal Herbs, LLC, DBC Limited, LLC, RM Farm & Livestock, LLC, Sunshine Enterprises (the “Estate entities”). Defendant Eric McGregor (“Defendant”) was an investor in the Ponzi scheme who allegedly received numerous avoidable transfers from the Estate entities.

Continue Reading New Complaint – Schwartz v. McGregor

Freitag, as Receiver for ANI Development LLC v. Dean Libs, et al. was filed in the Southern District of California on January 25, 2022, asserting one claim for fraudulent transfer.

Plaintiff is the court-appointed permeant receiver for ANI Development LLC (“ANI Development”), American National Investments, Inc., and their subsidiaries and affiliates (“Receivership Entities”) in an action titled SEC v. Gina Champion-Cain, et al., Case No. 3:19-cv-01628-LAB-AHG (“SEC Action”).  Plaintiff was appointed Receiver in the SEC Action and was vested with exclusive authority and control over the assets of the Receivership Entities, as well as investigatory powers.  This action is against Defendant Dean Libs, in his individual capacity, and Defendant Dean Libs Inc., a California corporation.

Continue Reading New Complaint – Freitag, as Receiver for ANI Development LLC v. Dean Libs, et al.

Backed by unrealistically ambitious owners, well-intentioned business ideas that fail to meet expectations or become unsustainable regrettably often become full-fledged Ponzi schemes.  Today’s Growth Consultant, Inc. (“TGC”) represents an entity that faced the same fate.

TGC advertised to potential investors its expertise in building, acquiring, and monetizing online websites.  Investors paid an upfront fee to TGC to purchase, host, maintain, and market the investors’ websites in exchange for TGC’s guarantee that investors would receive a minimum rate of return in perpetuity on the revenues TGC generated from those websites.  TGC raised at least $75 million during a nearly three year period, but its business model proved unsuccessful—it failed to timely purchase and build the promised websites or generate the promised revenue to cover the guaranteed returns to investors.  Instead, TGC turned into a Ponzi scheme to sustain its failing business by paying early investors with money it raised from later investors.

TGC maintained its business bank accounts at Defendants Heartland Bank and Trust Company (“Heartland”) and PNC Bank, N.A. (“PNC”) (collectively, “Defendants”).  TGC banked with Heartland until October 2018, and with PNC thereafter until December 2019.  Defendants provided TGC with typical banking services, including deposit accounts, commercial loans and revolving lines of credit, ACH capabilities, and transfers into, out of, and among TGC’s accounts.

In a recent decision in PLB Investments LLC et al. v. Heartland Bank and Trust Co. et al., the Northern District of Illinois decided that various defrauded investors of TGC (“Plaintiffs”) did not set forth sufficient allegations to show actual knowledge of a Ponzi scheme or bad faith in support of various Illinois state law claims against PNC.  No. 20 C 1023, 2021 WL 5937152 (N.D. Ill. Dec. 15, 2021).  While different jurisdictions set varying thresholds for adequately alleging actual knowledge or bad faith, PLB Investments emphasizes the importance of analyzing these elements early on to determine whether a plaintiff has alleged sufficient facts on the pleadings.

Continue Reading Illinois Federal Court Carves Up Plaintiffs’ Ponzi Scheme Claims For Lack of Actual Knowledge or Bad Faith

Heinen v. iDigrati, LLC, et al. was filed in the Superior Court of Gwinnett County, Georgia on December 16, 2021, claiming civil damages for breach of contract and state securities violations in connection with purported investments in promissory notes sold by Defendants.

Plaintiff is an individual who invested $200,000 with Defendant in exchange for a promissory note. Defendants are the investment company, iDigrati, LLC (“iDigrati”) and its two operating individuals, Narendra Patel and Bruce Rowland.  Rowland is deceased and is represented by his estate in this action.

Continue Reading New Complaint – Heinen v. iDigrati, LLC, et al.

On the heels of a related action filed by the Securities and Exchange Commission (“SEC”) on November 12, 2021, Eckfeldt v. Barber was filed in the Superior Court of California, Orange County, on December 9, 2021, claiming breach of contract, fraud, intentional misrepresentation, and conversion.

Continue Reading New Complaint – Eckfeldt v. Barber

Two related cases, Bradley D. Sharp v. Shinhan Bank Co., Ltd. (the “Shinhan Action”) and Sharp v. Daishin Securities Co., Ltd. (the “Daishin Action”), were filed in the United States District Court for the Central District of California on November 23, 2021 by the receivers for various businesses under the Direct Lending Investments, LLC umbrella of companies (“Direct Lending”).  Both actions allege that certain redemptions paid out to investors in a fraudulent investment scheme constitute constructive and actual fraudulent transfers under California’s Uniform Voidable Transactions Act, regardless of the investors’ knowledge of the underlying fraud.

Plaintiffs in both actions are receivers (the “Receivers”) appointed in the underlying SEC enforcement action against an investment manager entity that was used to carry out a fraudulent investment scheme (the “Receivership Entity”). Defendants in the Shinhan Action are investment funds (the “Defendant Funds”) that invested in the scheme, trustees (the “Defendant Trustees”) that entered into subscription agreements with the Receivership Entity on the Defendant Fund’s behalf, and fund managers (the “Defendant Managers,”) that sold the funds to investors.   Defendant in the Daishin Action is a South Korean investment company that invested in the scheme.

Continue Reading New Complaints – Sharp v. Shinhan Bank Co., et al. & Sharp v. Daishin Securities Co., Ltd.

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

Geoff Winkler, as Receiver for Profit Connect Wealth Services, Inc. v. William Roshak, et al.  was filed in the United States District Court for the District of Nevada on November 4, 2021 asserting claims for (1) fraudulent transfer; (2) unjust enrichment; (3) declaratory relief; and (4) attorneys’ fees and costs.

Plaintiff is the court-appointed receiver of Profit Connect Wealth Services, Inc. (“Profit Connect”) in an action titled Securities and Exchange Commission v. Profit Connect Wealth Services, Inc., et al., Case No. 21-cv-01298-JAD-BNW (D. Nev.) (the “SEC Action”). Plaintiff was appointed as the Receiver in that matter and granted broad authority to investigate claims and institute actions and legal proceedings on behalf of Profit Connect and its investors. This action is against Defendants William Roshak in his individual capacity and d/b/a/ William George Photography, Melissa Roshak, Tetiana Luzhanska, and Tina M. Leiss, in her sole capacity as the executive officer of the Public Employees’ Retirement System of Nevada (“PERS”).

Continue Reading New Complaint – Winkler v. Roshak, et al.

Securities and Exchange Commission v. Swapnil J. Rege and SwapStar Capital, LLC was filed in the U.S. District Court for the District of New Jersey on October 26, 2021, claiming the defendants violated the Investment Advisors Act by engaging in fraudulent or deceptive conduct upon an advisory client and charging Rege with violating a 2019 SEC Order barring him from associating with an investment adviser.

Continue Reading New Complaint – SEC v. Rege, et al.

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.

Continue Reading New Complaint – Fiene v. Schweinzger