On March 17, 2014, Elaina Patterson pleaded guilty in Middlesex Superior Court to stealing over $2.1 from investors. She convinced friends and family to invest in accounts that she said offered high interest rates. She then used the money to make payments to other investors and launder money into her own accounts. She was sentenced to up to five years in prison.
Bankers and businessmen have been swindling the public since the turn of the century. Here are some other notable local and national Ponzi schemes that have been uncovered. Next
Bernard Madoff (center), a prominent money manager and former chairman of the Nasdaq stock market, pleaded guilty in 2009 to losing $50 billion of his investors’ funds in a Ponzi scheme. On June 29, 2009, Madoff was sentenced to 150 years for what a federal judge called an act of “extraordinary evil.”
While Madoff’s was the largest Ponzi scheme ever uncovered, he’s not the only one to have bilked unwitting investors. Next
Once an old, poor Portuguese woman, Maria Branca dos Santos, more commonly known as “Dona” Branca, decided it would be fun to start her own “bank,” and get people to invest by promising them a 10 percent interest rate per month. Over 14 years later, she was found out, arrested, and sentenced to 10 years in prison, where she died.
Her story inspired a 1993 Portuguese soap opera called A Banquiera do Povo—“The People’s Banker.”
Lou Pearlman, $500 million
The man responsible for N’Sync and the Backstreet Boys also ran Trans Continental Airlines Travel Services, Trans Continental Airlines Inc., and 12 other companies—or at least he said he did. Turns out, his transportation companies only existed on paper. He planned to use his money to fund an entertainment complex.
When he was discovered, he tried to flee the country, but was captured and sentenced to 25 years in prison.
Gerald Payne, $500 million
There’s no other word for this one than “blasphemy.” In the early 1990s, Gerald Payne and his Greater Ministries International church used God’s word to cheat about 18,000 people out of nearly half a million dollars, saying the people’s investments would go toward the church’s precious metal investments (there weren’t any), and that investors would make double in returns. Payne was eventually caught, but most of the investors were never repayed. He received 27 years in prison. Next
Stephen Clifford, $4.3 million
The Plymouth resident received millions of dollars in investments between 2003 and 2008. Rather than giving investors the 7 percent in return he guaranteed, Clifford spent the money on his alimony, his mortgage, and his daughter’s college tuition. He pleaded guilty in May 2010 in US District Court to fraud and tax charges. Next
Guy de Chimay, $7 million
The 47-year-old chairman and chief investment officer at Chimay Capital Management Inc., was sued by the SEC last year and charged with forgery, criminal possession of a forged instrument, grand larceny, attempted grand larceny, and a felony violation of general business law. Bloomberg wire service reported in March he pleaded guilty and was sentenced to three to nine years in prison. He was also order to pay more than $6 million in restitution, the wire service reported. Next
Nicholas Smirnow, $70 million
Smirnow’s Internet-based Ponzi scheme bilked some 40,000 investors from around the world. For two years, his “Pathway-2-Prosperity” scheme targeted people on six continents and in every state except Maine and Vermont. Smirnow promised annual returns ranging from 546 to 17,000 percent. A 10-count federal complaint was filed against him in May 2010, although his whereabouts could not be confirmed at the time. Next
Tom Petters, $3.65 billion
The Minnesota businessman founded Petters Group Worldwide Inc. and used one of his companies to bilk investors who thought their money was being used to buy electronic goods.
The now-bankrupt Cambridge company Polaroid was once included among his businesses. On Dec. 2, 2009, Petters was convicted on 20 counts, including wire fraud, mail fraud, and money laundering. He was sentenced on April 8, 2010, to 50 years in prison.
Scott Rothstein, $1.2 billion
The disbarred Florida attorney, who courted politicians and star athletes and led a flamboyant lifestyle even by South Florida standards, pleaded guilty Jan. 27, 2010, to federal charges that he ran a $1.2 billion Ponzi scheme. He was sentenced to 50 years in prison.
Rothstein offered supposedly lucrative investments in fabricated legal settlements. Rothstein’s attorney said his client is focused on returning as much money as possible to investors.
Richard Elkinson, $29 million
The 76-year-old Framingham man allegedly recruited people, many of whom knew each other through the Belmont Country Club and other social networks, to invest in a purported business that helped supply uniforms to governments and large organizations. Elkinson was arrested by FBI agents in Mississippi and charged with mail fraud. In April, he pleaded guilty yesterday to 18 counts of mail fraud in US District Court in Boston. Next
Frank Russo, $20 million
In a scheme that started in the early 1980s and thrived for as long as 25 years, the Wakefield man defrauded more than 250 North Shore investors of about $20 million. In February 2008, Russo was sentenced to 18 years in prison after pleading guilty to federal criminal charges. He was also ordered to pay $2 million in restitution to his victims, many of whom were left financially destitute, and to forfeit his Wakefield house and other assets. Next
Bradford Bleidt, $32 million
Bleidt started managing money for a number of North Shore Masonic lodges and other social clubs in the 1990s.
In November 2004, Bleidt—a member of the Masons—was caught swindling 125 clients out of $32.6 million and sentenced to 11 years in prison.
Bleidt is shown at left in this courtroom artist’s rendering of his arraignment in court.
Miko Dion Wady, $25 million
Phoenix, Ariz., concert promoter Wady was accused of bilking 140 investors in 3-year Ponzi scheme budgeting top-tier acts like Barbara Streisand and The Rolling Stones (left).
A 37-count indictment charging Wady with wire fraud and money laundering was handed up on Dec. 1, 2009. In February, he pleaded guilty to six counts of wire fraud and money laundering.
Patrick Kiley and Trevor Cook, $190 million
Minneapolis-based radio hosts Patrick Kiley and Trevor Cook recruited investors on a weekly Christian radio show called “Follow The Money.”
Some people lost their entire nest eggs in what federal regulators called an elaborate Ponzi scheme, including 63-year-old Tom Annis from Jacksonville, Fla. Annis, a retired Air Force sargeant, lost $270,000 to the scheme run by Kiley and Cook.
Michael C. Regan, $9 million
Michael C. Regan of Quincy was charged with running a $9 million Ponzi scheme through his investment fund River Stream Fund, which promised stock trading at high returns. His scheme targeted close friends. On June 24, 2009, the Massachusetts investment manager pleaded guilty in a New York City federal court. He was sentenced to seven years in prison. Next
Paul Melbye, Brendan Coughlin, and Henry Harrison, $485 million
Provident Royalties LLC received a temporary restraining order and emergency asset freeze from the SEC on July 2, 2009. Three principals in the firm—Melbye, Coughlin, and Harrison—were accused of orchestrating a $485 million gas and oil asset Ponzi scheme. More than 7,700 US investors allegedly were falsely promised up to 18 percent returns on funds. Next
James Ossie, $25 million
The CEO and president of CRE Capital Corporation was charged by the SEC on Jan. 15, 2009, with fraudulently obtaining at least $25 million during 2008. Investors in CRE were allegedly promised 10 to 20 percent returns every 30 days.
Ossie settled charges on June 22, 2009, by agreeing to give back the $25 million he allegedly bilked from investors.
Andres L. Pimstein, $30 million
Florida resident Andres L. Pimstein received a civil injunction from the SEC on Oct. 30, 2008. His companies operated a $30 million Ponzi scheme, telling at least 80 investors that funds went toward buying iPods and other electronics from US vendors for resale in Chile. Investors were promised 36 percent returns. On March 20, 2009, Pimstein was sentenced to 17 years in jail after pleading guilty to 12 counts of wire fraud. Next
Charles Ponzi, $15 million
In 1903, Italian immigrant Charles Ponzi moved to the United States, where he founded the Securities Exchange Company and misled thousands of New England residents by promising 50 percent returns on investments through 1920. Ponzi received a jail sentence after fleeing to Texas and was then deported. Back to the beginning
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