ponzi scheme suspects

Ponzi Scheme Suspect Appears in Court

John Donnelly, a 52-year-old Charlottesville man accused of conducting a multi-million dollar Ponzi scheme, made an appearance in Charlottesville Federal Court Thursday morning. His defense attorney, John Davidson, asked the judge to continue the court proceedings regarding bail and a preliminary hearing until next week.

"Both the government and the defense and the court have a lot of work to do before we're able to more forward substantively on anything," said Davidson. He went on to say that he did not believe Mr. Donnelly is any sort of flight risk, but the judge will ultimately have to make that decision.

Donnelly's wife, Deborah was also in the courtroom Thursday, but had no comment on the case.

"Mr. Donnelly is very very concerned and worried about his family. In these rush of accusations that have come out against him we just hope that the public respects his family privacy," said Davidson.

A federal court spokesperson said John Donnelly was arrested Wednesday morning after agents executed a search warrant at his home in Ivy. According to the U.S. Securities and Exchange Commission, John Donnelly fraudulently obtained at least $11 million from as many as 31 investors since 1998.

SEC officials say Donnelly runs a number of companies including Tower Analysis, which is located on the 600 block of Water Street in Charlottesville. Donnelly allegedly scammed the companies by selling investment fund securities but never actually traded any securities and used new investor money to pay off the people that were already involved. The feds also say Donnelly paid himself about $1 million in salary and fees during the last three years.

The SEC has frozen all assets under the control of Donnelly and his firms. Donnelly is being held at the Central Virginia Regional Jail in Orange County and will be in court again next Thursday.

Madoff Guilty Of Ponzi Scheme, SEC Charges Two Others

After Bernie Madoff is pleaded guilty in a Ponzi Scheme and ordered to jail SEC has charged two others from California in a multi-million dollar Ponzi scheme type of investment fraud.

The Securities and Exchange Commission today charged Northern California residents Anthony Vassallo and Kenneth Kenitzer for orchestrating a multi-million dollar investment fraud. Vassallo agreed to a court order freezing his assets. The SEC is seeking an emergency court order to also freeze the assets of Vassallo's company, Equity Investment Management and Trading, Inc. (EIMT).

According to the SEC's complaint, Vassallo and Kenitzer raised more than $40 million from about 150 investors from approximately May 2004 to November 2008. Vassallo told investors, many of whom he met through his church, that he had a proprietary computer software program that allowed him to buy and sell stock options and generate returns of 3.5 percent per month with little risk of loss. The SEC alleges that Vassallo and Kenitzer instead used investors' money for unauthorized purposes, including a variety of other schemes never disclosed to investors.

"Today's action reaffirms that the SEC will take immediate steps to preserve assets for investors victimized in fraudulent investment schemes," said Marc Fagel, Director of the SEC's San Francisco Regional Office. "The defendants' deception went so far as fabricating computer 'screen shots' for investors that purported to show more than $50 million in securities holdings, when in fact they had completely emptied the brokerage accounts."

The SEC's complaint, filed in federal court in Sacramento, alleges that Vassallo told investors that their money was being invested in securities pursuant to a proprietary trading strategy that promised high returns with minimal risk. From September 2007 through approximately November 2008, Kenitzer, who participated in EIMT's day-to-day operations, posted false trading results on the company's Web site and distributed phony investment reports to investors that led them to believe EIMT was achieving consistent, positive returns. According to the SEC's complaint, EIMT actually had not conducted any stock trades since at least September 2007, when its brokerage firm terminated Vassallo's trading privileges. The SEC alleges that Vassallo and Kenitzer kept the scheme going by using money raised from new investors to pay earlier investors, a classic hallmark of a Ponzi scheme.

The SEC's complaint charges Vassallo, Kenitzer and EIMT with violations of the anti-fraud provisions of the federal securities laws. In addition to an emergency order freezing EIMT's assets, the SEC seeks injunctive relief, disgorgement of defendants' ill-gotten gains, and financial penalties.

The SEC acknowledges the assistance of the United States Attorney's Office, Federal Bureau of Investigation, and Internal Revenue Service.

madoff client list

It's increasingly apparent that Bernard Madoff's investment services weren't as exclusive as once thought.

An eclectic list purporting to name thousands of people who lost money in Mr. Madoff's alleged $50 billion Ponzi scheme -- complete with their street addresses -- includes housewives and retirees, a plumbers union and a high school. The list, released as part of his firm's bankruptcy-court proceedings, is providing fodder for gawkers who are already poring through it to look for friends, business associates and prominent people who had so far avoided the spotlight, but who now have been outed.

The list includes baseball legend Sandy Koufax. In addition it lists some other famous-sounding names: John Malkovich (the actor's agent declined to comment); the late musical philanthropist Avery Fisher (a family member declined to comment); and Phyllis George (the former television host and Miss America 1971 couldn't be reached for comment).

Also on it is the family trust of Susan Leavitt, a stay-at-home mother of two in Tampa, Fla. She was dropping off her son at grade school Thursday morning when another parent mentioned that a list naming Mr. Madoff's investors was circulating. She was horrified: Her family's name is on it.

The document, released late Wednesday, consists of people who either were identified as customers in Mr. Madoff's records or who identified themselves as customers by contacting Irving Picard, the court-appointed trustee in charge of liquidating Mr. Madoff's assets, or the Securities Investor Protection Corp.

"It's as public as Paris Hilton porn movies," says Steven Salbe, 42 years old, a consultant who sets up corporate computer systems in Boca Raton, Fla., whose family lost much of its savings in the scandal. "It's the one list I prefer not to be on, but I'm on it."

The list also includes the incarcerated. Melvyn Weiss and David Bershad -- two high-profile one-time plaintiffs' lawyers now serving time in federal prison for illegally paying kickbacks to clients -- appear to be victims of the fraud.

This type of information is routinely released during bankruptcy proceedings. But the massive size of the alleged fraud, the tremendous interest it has spawned, and the technology available to post it digitally has fueled an online frenzy.

But within hours, Josh Linsk, a 26-year-old who runs a publishing company based in Las Vegas, transformed it into a searchable database, www.madoffsearch.com, which he dubbed "The first and only Bernard Madoff Search Engine."

The list isn't entirely accurate. New York law firm Wolf Popper LLP was included. But Wolf Popper partner Jim Harrod said he had no idea why. "I have to assume that that's a mistake," said Mr. Harrod. One possible explanation is that it was inadvertently included because the law firm, on behalf of some clients, has sued Fairfield Greenwich Group, a firm that invested client funds with Mr. Madoff.

Particularly surprising was the appearance of Ira Lee Sorkin -- Mr. Madoff's lawyer -- on the customer list. Whether Mr. Sorkin or his family members lost money through Mr. Madoff is unclear. A person familiar with the matter says Mr. Sorkin's father, Nathan, opened an IRA account with Mr. Madoff at some point in the 1990s.

Sherry Morse, an interior designer in San Francisco who lost much of her retirement money, says she was shocked to receive an email Wednesday afternoon from an online group of Madoff investors, telling her the customer list was making the rounds.

Some of the victims didn't mind the attention. The Plumbers & Steamfitters Local 267 in Syracuse, N.Y., lost about $48 million in pension and other funds it had invested with Mr. Madoff. "We don't have any issues to hide," said Gregory Lancette, business manager for the union.