Paramount Pictures

A North Carolina man has agreed to plead guilty to charges of securities fraud brought forward by the US Attorney’s Office in Charlotte. Vass resident James Alexander Shepherd, 58, admitted responsibility for running a $6 million scam that defrauded 176 investors. While the sum of claims is still be determined, Shepherd has agreed to pay restitution to victims of his scheme.

From 2006 to 2013 Shepherd operated a registered commodity pool supposedly trading on futures contracts through the Shepherd Major Play Option Fund LP (“Major Play”) as well as a hedge fund known as the Shepherd Model Hedge Fund. He promised his investors significant profits from these vehicles and was able to raise a total of $10 million. Unfortunately, however, Shepherd wasn’t playing by the rules and misappropriated $4.45 million from Major Play over the course of 7 years. Shepherd used that set of client money to pay out redemptions for his hedge fund, apparently following a variation of the Ponzi business model. For all his hard work, he would also reward himself a $2 million house and make mortgage payments with investor largesse.

Shepherd managed to sustain the fraud by sending clients bogus financial statements and deceiving an accountant who audited the funds. In order to do the latter, Shepherd created a fake mailbox address for the bank where Major Play money was held as well as an imaginary bank employee named Charles Fisher. The non-existent Fisher would verify the amount of funds to the unsuspecting auditor, who would then confirm the bank balance as a seal of legitimacy. This trick worked until March of this year, when Shepherd refused to switch to now-standard methods of electronic verification. At the end of 2012, Shepherd claimed Major Play held $6 million in its accounts, while in reality there was less than $100,000 left.

JAMES ALEXANDER SHEPHERD

• Age: 58
• Company: Major Play Option Fund LP, Shepherd Model Hedge Fund, James A. Shepherd Inc.
• Job: Trader
• Scam: Commodities Pool, Hedge Fund
• Ponzi Time: 2001-2005
• Number of Victims: 176
• Amount of Fraud: $6 million
• Location: Charlotte, NC
• Indictment: Securities Fraud
• Court: US District Court, Western District of NC

US v. James Shepherd Information

James Shepherd CFTC Complaint

A recent profile by The Sacramento Bee tells the story of Carissa Carpenter, an independent “entertainment executive” who over the past 16 years has marketed visions of a groundbreaking film studio complex to several towns in Northern California. For well past a decade Carpenter, 50, has been talking up her initiative to create a little slice of Hollywood in locations from El Dorado County to Sutter, San Joaquin and Stanislaus counties.

Now the Solano County town of Dixon is the would-be mogul’s latest proposed location for her $2.8 billion studio project. While Carpenter has informed the local administration that she and her unnamed financial backers have secured the 300 acres necessary for the development, the $100,000 deposit she promised to the city for work-related expenses is still forthcoming. Reporters from The Bee have uncovered that Carpenter has racked up $988,000 in court judgments and over $100,000 in tax liens, for a total of 28 civil suits and two criminal actions since 1991. Among the cases are included:

• A Sacramento County felony complaint for misappropriating $34,000 from her grandmother’s bank account in 2003.
• A $650,000 settlement (that has yet to be paid) over an attempted purchase of an $18.5 million Beverly Hills mansion in 2004.
• A $57,000 judgment filed last year by a Southern California dentist for unpaid bills on dental reconstructive surgery.

Carpenter has claimed that her company Morning View, LLC will cover the costs of studio development once details of the plan are finalized. She also points to the project’s environmentally safe “green” systems, thousands of new jobs, rising property values and a $200 million annual fund to benefit town residents. The schematics sound familiar to past investors and officials of other counties interviewed by The Bee, many of whom say that despite all the fabulous promises, Carpenter would eventually skip town without any movie studio to show for the effort. Dixon Mayor Jack Batchelor Junior and City Manager Jim Lindley, however, are looking forward to glad-handing with celebrities:

Driving back to City Hall from the acreage, Lindley and Batchelor said community excitement is building.

‘A huge amount of people are very excited about having Nicole Kidman and Robert De Niro running around town,’ Lindley said.

Batchelor said that, should he ever happen across Tom Cruise in his town, he would simply say: ‘Good morning, sir, and welcome to Dixon.’

With so many stars of the silver screen about to converge on the town, how long will it take before a glittering, massive Scientology Org dominates Dixon’s landscape?

Gosh, can anyone tell me which one of these guys is Lou?   Time-LIFE

It’s been a long six years for victims of “Big Poppa” Lou Pearlman’s $317 million Ponzi scheme, and now they know what sort of recompense they’ll be receiving- just 4% of the funds they invested. Bankruptcy Trustee Soneet Kapila filed the liquidation plan for Pearlman’s estate on Wednesday, adding that investors could be due for a higher figure if further clawback efforts prove a success. Kapila has filed over 700 adversary claims for $100 million. $35 million has been recovered at this point in time; much of that money, though, will go to secured investors like banks, as well as attorneys conducting the litigation.

Pearlman, soon to be 59, is now sitting out a 25-year term in federal prison for defrauding nearly 2,000 investors over the course of two decades. From 1986 to 2006 the Orlando-based blimp king and big-bopping manager of boy bands like Backstreet Boys and N’Sync ran a giant Ponzi scheme through his company Trans Continental Airlines.

chemistry.about.com

Pearlman solicited funds for Trans Con’s Employee Insurance Savings Account program (EISA), which he pitched as a lucrative arrangement that would yield 6-14% returns every year. While Trans Con supposedly wielded a fleet of 400 aircraft, it turned out the real number was closer to three; payouts to clients from the EISA were sustained by incoming investor principle. By late 2006 Pearlman’s Trans Con empire along with its web of subsidiary businesses (among them Chippendales) had imploded, leaving many victims destitute. The pop-music impresario had also used their money to purchase a $12 million mansion, a $3 million private jet and other luxuries.

Kapila remarked that Pearlman has proven “singularly unhelpful in cleaning up the mess he created.” That may be the case, but even in prison, Big Poppa has been a busy man. Pearlman, accused of being a sexual predator by numerous credible sources, apparently maintains an official YouTube channel where until recently an audition notice for a new boy band was posted. The video has since been removed.

By Georg Chlebarov/Camera Press/Retna Ltd.

LOU PEARLMAN

• Age: 58
• Company: Trans Continental Airlines
• Jobs: President of Trans Con, Boy-Band Manager
• Scam: Trans Con Employee Investment Savings Program
• Annual Returns: 3-14%
• Ponzi Time: 1986-2006
• Amount of Fraud: $317 million
• Number of victims: 1,800
• Location: Orlando,FL
• Indictment: Multiple Counts of Wire Fraud, Mail Fraud, Bank Fraud, Money Laundering, Conspiracy
• Court: U.S. District Court, Middle District of Florida

Lou Pearlman Criminal Complaint

Lou Pearlman Adversary Complaint

Lou Pearlman Liquidation Plan

techcrunch.com

Folsom, CA, resident Anthony Vassallo has learned the hard way that it’s not so easy to renege on a guilty plea in US District Court. Last month the 33-year-old Vassallo attempted to withdraw from his plea agreement with federal prosecutors after admitting responsibility for an $83 million Ponzi scheme. Judge Garland Burrell Jr. ruled against any such possibility yesterday when he tossed out the defendant’s claim to have signed the document under duress. Vassallo asserted that the only reason he made the plea deal in February of this year was because he was stuck in Oroville County Jail at the time.

Vassallo was indicted by a federal grand jury in Sacramento four years ago for running a massive investment scam from 2006 to 2009. Using his hedge fund Equity Investment Management and Trading (EIMT), Vassallo solicited investors with the claim of operating special trade software that produced 36% annual returns on the stock market with minimal risk. Yet at EIMT there were no special machines whirring and beeping away to generate such stupendous profits; the ground-breaking program Vassallo promoted amounted to little more than the distribution of investor principal as fictitious interest. And when he did try his hand on the markets with clients’ money, he would flush those funds away as well. Vassallo ultimately managed to ensnare some 300 victims, many of them fellow Mormons from the LDS community in Northern California.

The Vassallo case previously made a splash in 2009 when four men impersonating FBI agents burst into EIMT offices and tried recover $378,000 on behalf of a woman defrauded in the scheme. Vassallo would be arrested a short time later, going on to violate the terms of his bail by contacting an investor, promising him access to a bank account supposedly holding $94 million. With regard to Vassallo’s bid to change his plea, Assistant US Attorney Jean Hobler wrote:

This is no game, and the entry of a guilty plea is not so light a thing that he can take it up on a lark and then cast it off on a whim. Vassallo must present a fair and just reason for withdrawing his plea, and he has failed to do so here.

ANTHONY VASSALLO

Folsom Telegraph

• Age: 33
• Company: Equity Investments Management and Trading (EIMT)
• Job: Hedge-Fund Manager
• Scam: Trades on Stock Market
• Years: 2006-2009
• Rate of Return: 36%
• Amount of Fraud: $83 million
• Victims: 300
• Affinity Fraud: Mormons
• Location: Sacramento,CA
• Indictment: Multiple Counts of Mail Fraud, Wire Fraud, Money Laundering
• Court: US District Court in Eastern District of CA

US v. Anthony Vassallo Indictment

Anthony Vassallo Plea Agreement

Anthony Vassallo SEC Complaint

MGM Home Entertainment

A husband-and-wife duo was sentenced this week in US District Court in Denver for running a rather audacious Ponzi scheme premised upon bank notes and diamonds. Richard Dalton, 66, and his wife Marie, 61, respectively received 10 years and 5 years of federal prison time for defrauding over 100 investors out of $17 million. Victims of the scam were spread across 13 states in the US and five countries internationally. After their indictment on charges of conspiracy, fraud and money laundering in 2011, the Daltons eventually saw the writing on the wall and made a plea agreement in February of this year. Prior to his scheme, Richard Dalton was protégé to Ponzi artist Larry Michael Parrish, also recently sent to prison for his illicit entrepreneurship.

It was from 2007 to 2010 that the Daltons operated the scheme under the cover of their company, Universal Consulting Resources (UCR). UCR supposedly specialized in the international trade of prime bank notes and diamonds at high yield and low risk, a decent initial indicator that something was amiss. Mr. & Mrs. Dalton promised investors that their principal would be insulated through escrow accounts, even as they claimed to generate fantastic 48-120% annual returns. One can’t accuse them of playing small ball; in at least one case, the pair told a prospective investor to expect nearly 1000% in yearly profits.

Unfortunately for investors, UCR was not actually trading financial instruments on world markets or shipping precious stones from South Africa to the Netherlands. The Daltons paid out $5 million in fictitious interest from clients’ own funds, stopping only when they learned the SEC was investigating their unique business model. In order to stall for time, the couple furnished victims with a number of excuses for non-payment, ranging from betrayal by their European trader to getting scammed by an African government and having “the number three engine go out” on the non-existent weekly diamond express flight.

The Daltons also saw it fit to misappropriate over $1 million in clients’ money for their own purposes. Expenditures included a $1 million house, a daughter’s wedding and $35,000 in custom dental work. After all, nothing pays off like a winning smile.

MGM Home Entertainment

RICHARD DALTON

• Age: 66
• Companies: Universal Consulting Resources
• Job: Diamond Broker
• Alleged Scam: Prime Bank Notes, Diamonds
• Profits: 48-1000% per year
• Ponzi Time: 2007-2010
• Number of Victims: 130
• Amount of Fraud: $17 million
• Location: Golden, CO
• Indictment: Multiple Counts of Conspiracy, Fraud, Money Laundering
• Court: US District Court, District of Colorado

US v. Richard Dalton Indictment

Richard Dalton Plea Agreement

Richard Dalton SEC Complaint

TriStar Pictures

The SEC is accusing Old Westbury, NY resident Brian Raymond Callahan of orchestrating a massive Ponzi scheme. Callahan, regulators say, managed to raise $90 million from 45 investors on the premise he was sending their principal to New York hedge funds such as those belonging to Morgan Stanley. Using five offshore funds, he pooled investor cash and then misappropriated it for his own purposes, the agency contends.  Also named in the SEC’s complaint is Callahan’s brother-in-law, Adam Judd Manson, who is implicated in furthering the enterprise by issuing investors highly inflated promissory notes in the scheme as well as accepting millions in diverted assets for the development of a beachfront resort in Montauk.

From 2005 to 2012 Callahan is alleged to have operated a complex scam through his company Horizon Global Advisors and a host of subsidiary funds he set up in the British Virgin Islands. These offshore vehicles were used for transferring cash between various involved parties, and included the following entities:

• Diversified Global Investments, L.P.
• The Masters Fund, L.P.
• Fiduciary Select Income Fund, L.P.
• Horizon Millenium Investments, L.P.
• Pangaea Offshore High-Yield Portfolio, LLC

Callahan would transfer to his brother-in-law Manson at least $33 million, which the latter placed in his own fund, Distinctive Investments, to prop up his failing resort project. The SEC contends that Callahan also distributed fictitious interest and made redemptions to investors while maintaining the illusion of profits and claiming that their principal was perfectly liquid. Yet investigators reported that while Callahan represented having $65 million in liquid assets under management at the end of 2011, he had only $6.5 million left, enabling him to inflate account fees charged to clients by 800%.

Callahan is also said to have never disclosed to his clientele a FINRA order that banned him from association with licensed brokers in 2009. There is an ongoing SEC receivership tasked with recovering funds from Callahan, Manson and other transferees; currently SEC Receiver Steven Weinberg has detailed up to $70 million in potential claims in the case.

BRIAN RAYMOND CALLAHAN

• Companies: Horizon Global Advisors
• Job: Hedge Fund Manager
• Alleged Scam: Investment Hedge Funds
• Ponzi Time: 2005-2012
• Amount of Fraud: $90 million
• Location: Old Westbury, NY
• SEC Complaint: Multiple Violations of Security Exchange Act
• Court: US District Court, Eastern District of NY

Brian Raymond Callahan SEC Complaint

Brian Raymond Callahan FINRA BrokerCheck Report

Nothing conveys gravitas like a chickensuit.   abc.go.com

While some of the films that Hollywood cranks out should merit criminal charges, running a Ponzi scheme has been proven to land you in jail sooner or later. And so Orange County producer Mahmoud Karkehabadi, also known as Mike Karkeh, was given a stiff prison sentence not for making terrible movies, but for using them to operate an $11 million investment fraud.

CA Superior Court Judge Richard Toohey sentenced Karkehabadi to 27 years in jail on May 31^st for swindling 120 investors; he had been originally been indicted in 2010 and was convicted in January of this year. Many of the victims were unsophisticated senior citizens.

The 55-year-old Karkehabadi ran his scam from 2006 to 2008, a period when he was producing schlock films through his company Alliance Group Entertainment. Included among his works were cinematic treasures like Hotel California, Lake Dead and Confessions of a Pit Fighter, starring Armand Assante and Flavor Flav. Karkehabadi solicited funds for these and other films, telling investors they would score anywhere from 18-35% on principal once the movies hit the box office. When each of movies didn’t meet sales expectations and no Oscars were forthcoming, he would encourage clients to roll their money into the next bomb with further promises of returns. Of the $11 million raised, only $535,000 in total profits were generated by Karkehabadi’s films.

With so little actual revenue from legitimate business, the producer found an “alternative” means of paying returns to investors by doling out interest from their own funds. Karkehabadi also spent a hefty helping of client money on himself, living the Tinseltown lifestyle with homes in Burbank and Laguna Niguel as well as a Mercedes and a Hummer. It’s noteworthy the B-movie mogul never informed victims of a previous $5 million judgment against him for credit card fraud. But hey, that’s show business!

oag.ca.gov

MAHMOUD KARKEHABADI

• Age: 55
• Companies: Alliance Group Entertainment
• Job: Movie Producer
• Scam: Investment in Films
• Profits: 18-35 % per year
• Ponzi Time: 2006-2008
• Amount of Fraud: $11 million
• Number of Victims: 150
• Location: Los Angeles, CA
• Indictment: 89 Counts of Grand Theft, Fraud
• Court: CA State Superior Court, Orange County

CA v. Mahmoud Karkehabadi Complaint

WBAY

Connecticut native Robin Brass has been taking it easy in federal prison for almost a year now due to running a $2 million Ponzi scheme, but fresh details have emerged on how she solicited investors for her fraudulent enterprise. It turns out the 56-year-old Brass used a quilting circle to drum up new cash flow for BBR Group, the company she ran as an investment advisor.

From 2004 to 2011, Brass was pitching a special zero-risk “formula” that guaranteed returns to her quilting sisterhood, and she backed up her claim with account statements showing consistent profits. Yet BBR Group’s formula amounted to the distribution of fictitious interest and misappropriation of the remainder of client funds. The documentation, meanwhile, was also bogus. Brass was sentenced in July 2012 to 8 years of incarceration.

US v. Robin Brass Indictment

http://www.flickr.com/photos/disneymike/

A Petaluma, CA, man is headed to trial after being accused of running a $20 million Ponzi scheme. Aldo Baccala, 72, will be appearing in Sonoma County Superior Court on June 12^th for arraignment on 135 criminal counts that include grand theft, fraud and elder abuse. Arrested last year, Baccala is said to have scammed around 75 victims in the area, many of them seniors. Judge Shelly Averill decided to exclude 17 charges from an extensive criminal complaint, citing the difficulty of tracing money transfers due to the co-mingling of funds.

While media have reported that Baccala may have operated his scheme for up to two decades, the Sonoma District Attorney’s Office is charging him for his activities from 2003 to 2008. It was during this period that Baccala solicited investors for a range of businesses, including nursing homes in the Carolinas, a car wash in Nevada and a Colusa mushroom farm. So profitable were these ventures, Baccala intimated, that he guaranteed investors 12% annual returns. Toward the end of his run, up to 27.5% yield was promised, leading one to believe the defendant must have been growing some dynamite mushrooms.

Prosecutors, however, contend that Baccala’s businesses were nowhere near as viable as represented. Rather than applying client funds to their stated purpose, they say, the defendant misappropriated victims’ money by paying out fictitious interest from and blowing around $8 million on unsuccessful stock market trades. By 2008 the scheme had collapsed, and Baccala ceased delivering payments on investor principal. The hardship caused by Baccala’s actions is made all the more acute in view of accusations he constructed a “web of deceit” that began with the exploitation of family and friends. Wayne Seden, a retired engineer who invested $50,000 in what Baccala told him was a legitimate enterprise, remarked:

I think he should serve a lot of time for what he did to these poor people. He basically just stole from them.

pressdemocrat.com

ALDO JOSEPH BACCALA

• Age: 72
• Companies: Baccala Realty
• Job: Real Estate Broker
• Alleged Scam: Car Wash, Nursing Homes, Mushroom Farm
• Profits: 12-27.5% annual returns
• Time: 2003-2008
• Amount of Fraud: $20 million
• Number of Victims: 75
• Location: Petaluma, CA
• Indictment: 135 Counts of Fraud, Grand Theft, Elder Abuse
• Court: CA Superior Court in Sonoma County

Aldo Baccala Criminal Complaint

Trinitone Cinematografica

After marketing himself as a benefactor of Africa and accusing investors of everything from plotting murder to being drug-crazed sex freaks, attorney Brian Ray Dinning of Suffolk, VA, did away with any further pretense and admitted in court to operating a Ponzi scheme. On Monday the 48-year-old Dinning made a plea agreement with the US Attorney’s office, thereby taking responsibility for a fraudulent venture that bilked over 20 victims out of $2.9 million. With family ties in Canada, Dinning had fled to Toronto last year, where he was arrested in August and extradited to the United States to face trial.

Several investment and charitable programs in South Africa served as the vehicle for Dinning’s scam, which operated from 2005 to 2012. Using NGOs and ostensible development projects for safari parks, gold and diamond mines, and seaside luxury resorts, the Virginia lawyer solicited investors with promises of 10-40% returns on their principal. Dinning also sweetened the deal by claiming the programs would contribute to the health and well-being of local tribes. Yet as it turns out, he never advertised that he was using new clients’ funds to pay off previous clients and settle the lawsuits they brought against him. Dinning also misappropriated investors’ money on items like alimony to his ex-wife, mortgage payments on a sizable house and school tuition for his children.

Dinning managed to use his legal background and connections in South Africa to his advantage in building credibility; he and his brother even took clients on safari tours, showing them properties for prospective development. Investigators on Dinning’s case would establish a clear pattern of fraud, though. As soon as an investor would entrust money to him for one of the Africa initiatives, he would soon withdraw a large amount of it for alimony or house payments. In one particular instance, Dinning promised two victims that $5,000 they contributed would be applied to construct a village church in honor of their deceased 16-year-old daughter. The church was never built- channeling Santa Claus, Dinning’s brother supposedly spent all the cash on Christmas presents for local children.

While professing to be a humanitarian and conservationist devoted to Africa’s future, it seems Dinning also had a strange penchant for harassing elephants. His sentencing is scheduled for October 2^nd.

Toronto Sun

BRIAN RAY DINNING

• Age: 48
• Companies: Earth Conservancy, Pure Africa, Honningklip Diamond Mine, Hole in the Wall
• Job: Lawyer, Entrepreneur, Philanthropist
• Alleged Scam: African Development
• Profits: 10-40% annual returns
• Time: 2005-2012
• Amount of Fraud: $2.9 million
• Number of Victims: 23
• Location: Suffolk, VA
• Indictment: 25 Counts of Wire Fraud
• Court: US District Court in Eastern District of Virginia

US v. Brian Ray Dinning Indictment

Brian Ray Dinning Plea Agreement