Securities and Exchange Commission v. BNZ One Capital, LLC, et al. was filed in the United States District Court for the Central District of California on October 28, 2021 claiming Defendants violated the antifraud provisions of the Securities Act,  the Securities Exchange Act,  and Rule 10b-5 thereunder, as well as the registration provisions of the Securities Act. The SEC also brings claims against individual Defendants Barber and Zimmerle for violations of the broker-dealer registration provisions of the Exchange Act and accuses them of being secondarily liable for BNZ’s fraud as control persons pursuant to the Exchange Act.

Continue Reading New Complaint – SEC v. BNZ One Capital, LLC, et al.

Marfleet v. Hardin, et al. was filed in the Western District of Tennessee on October 20, 2021. The complaint alleges Defendants operated a nationwide real estate Ponzi scheme that defrauded investors by falsely promising “secured” real estate investments and above-market rates of return in exchange for capital.

Plaintiff Barry Marfleet (“Plaintiff”) is an individual investor. Defendants are James Hardin and his two companies, Defendant Hardin Enterprises Inc. and Defendant MRH Holdings, LLC, (collectively “Defendants”).


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Securities and Exchange Commission v. Woods, Livingston Group Asset Management Company d/b/a Southport Capital, and Horizon Private Equity, III, LLC was filed in the United States District Court for the Northern District of Georgia on August 20, 2021. The SEC alleges that Defendants defrauded investors, many of whom were elderly, with illusory promises of guaranteed returns for their investment in the Defendants’ affiliated fund.

Continue Reading New Complaint – SEC v. Woods, 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.

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Puleo, et al. v. Nelson, et al. was filed in the Central District of California on August 10, 2021, seeking damages based on more than thirty claims for violation of various state and federal securities laws, elder financial abuse, fraud, negligent misrepresentation, and conspiracy to commit fraud in connection with a real estate Ponzi scheme.

Plaintiffs are numerous individual and trustee investors who invested in student housing projects either as individuals, through their business enterprises, or as trustees of trusts.  Defendants are Nelson Partners, a California limited liability company that sponsored the offering of the real estate interests, Patrick Nelson as the sole owner, president, and chief executive officer of Nelson Partners (collectively, “Nelson Partners”), Axonic Capital LLC, a hedge fund (“Axonic”), and various other individual and corporate investment advisors and funds affiliated with Nelson Partners and Axonic.


Continue Reading New Complaint – Puleo, et al. v. Nelson, 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.


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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.

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