Sedlar-Sholty, et al. v. Acclivity West, LLC, et al. was filed in the Superior Court of the State of California, County of Los Angeles on July 19, 2021 seeking damages for negligence, breach of fiduciary duty, and negligent and intentional misrepresentation in connection with a life settlement investment Ponzi scheme.

Plaintiffs are numerous individual and trustee investors who made investments in life insurance policies, either independently or through their retirement programs.  Defendants are Acclivity West LLC (“Acclivity West”), a California company, and several owners and employees of Acclivity West.
Continue Reading… New Complaint – Sedlar-Sholty, et al. v. Acclivity West, LLC, et al.

Ballard v. NTB Financial Corporation was filed in the Arapahoe County District Court on July 7, 2021, claiming that Defendants conspired with Financial Visions, Inc. (“FV”) and its principal, Dan Rudden (“Rudden”), to induce investors into purchasing unregistered securities in violation of antifraud provisions of the Colorado Securities Act.

Plaintiffs are individuals and a business entity who invested in promissory notes sold by FV and Rudden. Defendants are NTB Financial Corporation (“NTB”), an investment firm based in Denver, Colorado, and George Louis McCaffrey III, a registered representative employed by NTB that is alleged to have advised certain clients to invest in the unregistered promissory notes.

Continue Reading… New Complaint – Ballard v. NTB Financial Corporation

Morrison, et al. v. Rockwell, et al. was filed in California Superior Court, Marin County, on May 28, 2021. The complaint seeks civil damages for claims of breach of fiduciary duty, multiple violations of the California Corporations Code, constructive fraud, breach of contract, and negligence.

Plaintiffs are a group of investors who used Defendants as investment advisors.  Defendants are a series of corporate entities, Dow Rockwell, LLC, Rockwell Retirement Partners, and Marin Wealth Management, LLC, an individual investment advisor, Rick Rockwell, and many unnamed defendants Plaintiffs believe may have been involved in aiding Defendants.

Continue Reading… New Complaint – Morrison v. Rockwell

The collapse of a Ponzi scheme usually follows a familiar pattern.  When the scheme is exposed, the company created by the schemer—which is usually little more than a sham entity—is placed into receivership or declares bankruptcy (or both).  A receiver or bankruptcy trustee is then tasked with recovering any funds belonging to the estate so that they may be distributed to creditors.  As part of this process, these court-appointed parties step into the shoes of the company and may bring any litigation that the company itself could have brought.  Bankruptcy trustees are also granted the exclusive right to bring “general claims” on behalf of the entities’ creditors.

This process creates a thorny question: who may seek recovery from a third party alleged to have been involved in the fraud?  Creditors that lent funds to sham companies often pursue claims against financial institutions that banked the schemers on aiding-and-abetting theories.  Yet receivers and trustees also often bring these claims, leading to duplicative litigation and the question of who properly “owns” the claim.

A recent decision by the U.S. District Court for the District of Minnesota provides important guidance on this question.  Ritchie v. JPMorgan Chase & Co., No. 14-cv-04786, 2021 WL 2686079 (D. Minn. June 30, 2021) untangles who has standing to bring claims against a third party alleged to have aided and abetted a Ponzi scheme.  As the Court explains, “general” claims for loss of funds belong exclusively to court-appointed bankruptcy trustees.  Third parties may only bring particularized claims that arise from injuries “directly traceable” to the defendant’s conduct.  Ritchie thus serves as a touchstone in disputes over standing in Ponzi litigation.

Continue Reading… Minnesota Court Untangles Who Owns What Claim in the Fallout of a Ponzi Scheme

Abidog v. New York Life Insurance Co. was filed in the Superior Court of the State of California on June 18, 2021, seeking damages and rescission of unregistered promissory notes sold in a Ponzi scheme that deprived elderly and other unwitting investors of their life savings.  The fifteen-count complaint alleges violations of California statutory and common law, as well as federal securities law.

Defendant Felix Chu is a former agent of Defendants New York Life Insurance Company and NYLIFE Securities LLC (collectively, “New York Life”) who used his role at New York Life to perpetrate the Ponzi scheme.  Plaintiffs are investors in the scheme.

Continue Reading… New Complaint – Abidog v. New York Life Insurance Co.

SEC v. The Estate of Kenneth J. Casey is a case filed by the SEC in the United States District Court for the Northern District of California on June 2, 2021, claiming that Kenneth Casey (“Casey”), the founder of Professional Financial Investors, Inc. (“PFI”), a real estate investment and management company, personally misappropriated over $10 million from investors as part of a scheme where Casey falsely told investors that their money would be used to invest in multi-unit residential and commercial real estate. Specifically, the complaint alleges that Casey violated 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5, and Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].

According to the complaint, Casey’s fraudulent scheme began to unravel shortly after his death, when questions arose about the solvency of PFI and one of Casey’s other companies, PISF. The SEC had previously filed an action against the president of PFI for his role in a fraudulent scheme to misappropriate funds from investors.

Continue Reading… New Complaint – SEC v. The Estate of Kenneth J. Casey

Wiand v. ATC Brokers Ltd, et al. was filed in U.S. District Court for the Middle District of Florida, on May 28, 2021.  The complaint was filed by a Receiver appointed in an action brought by the Commodity Futures Trade Commission (the “CFTC”) alleging the operation of a Ponzi scheme.  The complaint alleges (1) aiding and abetting fraud, (2) aiding and abetting breach of fiduciary duties, (3) gross negligence, and (4) simple negligence.  In addition, the complaint seeks to avoid alleged fraudulent transfers received by ATC Brokers Ltd.

Plaintiff is the court appointed Receiver over Oasis International Group, Limited, Oasis Management LLC, and Satellite Holdings Company (the “Oasis Entities”) in an action filed by the CFTC, titled Commodity Futures Trade Commission v. Oasis International Group, Limited, et al., Case No. 8:19-cv-00886-VMC-SPF (M.D. Fla. Apr. 15, 2019).  Defendants include: (1) ATC Brokers Ltd., the exchange firm the Ponzi scheme operators used to carry out the scheme; (2) Spotex LLC, the entity that provided the software used to carry out the Ponzi scheme; and (3) an owner of both entity Defendants.

Continue Reading… New Complaint – Wiand as Receiver for Oasis International Group, Limited, et al. v. ATC Brokers Ltd, et al.

Whitmore v. Horwitz was filed in the Central District of California on April 20, 2021, seeking class certification and unspecified civil damages. The complaint alleges fraud by omission, aiding and abetting fraud, breach of fiduciary duty, and aiding and abetting breach of fiduciary duty.

Plaintiffs are a group of investors seeking to represent a class of those who invested in Horwitz’s company, 1inMM Capital, LLC (“1inMM”). The defendants are Zachary Horwitz, 1inMM, and City National Bank (“City National”), the bank that Horwitz and 1inMM used.

Continue Reading… New Complaint – Whitmore v. Horwitz

The SEC filed SEC v. Silver in the United States District Court, Southern District of New York on April 13, 2021, claiming Defendant Silver orchestrated and carried out a string of frauds to cover up tens of millions of dollars in losses on bad bets to keep his investment advisory business afloat. Specifically, the complaint alleges violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933.

Defendant Silver was the co-founder, managing partner, and chief operating officer of his business, International Investment Group LLC (“IIG”), which specialized in advising clients in investments in emerging market economies. IIG formed three private funds with stated strategies of investing trade finance loans marketed to qualified institutional investors.

Continue Reading… New Complaint – SEC v. Silver

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.

Continue Reading… New Complaint – SEC v. Horwitz