This was published in the November, 2019 issue of THE PAPER SOURCE JOURNAL. For information on subscribing, click on the tab above, “Paper Source Journal.”
Why am I posting a roundup of note frauds committed this year (so far)? It’s because most people aren’t aware of how many there are and how serious is the problem. THE PAPER SOURCE appears to be the only source of this information in the note industry, and so many people continue to be victimized. I don’t want you to be one of them. Thousands of investors lost over $2.2 billion in the fraudulent note funds below just this year alone. And this is not even a complete list.
Here are some tips to protect yourself against fraud:
- * When you buy a note, TAKE POSSESSION OF IT. Own all the original documents, including the assignment from the seller with their actual signature, not copies.
- * Service your notes yourself or hire a servicing company not affiliated with the note seller.
- * Don’t invest in “note funds” or “joint ventures,” etc. Do not trust others with your money. (Yes, undoubtedly there are some good funds, but even honest people can unknowingly hire crooks.)
- * Don’t buy notes from those who teach notes: that’s an inherent conflict of interest. No honest person would teach you how to buy notes at the best price and then try to sell you notes.
Many of these note frauds reported in 2019 (with one exception) are courtesy of ThePonziBook.blogspot.com
Robert Shapiro pleaded guilty to running a $1.3 billion Ponzi scheme through Woodbridge Group of Companies. Woodbridge’s funds promised investors big returns on real estate notes. The scheme defrauded more than 9,000 victims. Shapiro admitted that he misappropriated between $25 million and $95 million of investor funds. Two alleged co-conspirators, Dane Roseman and Ivan Acevedo, are scheduled for trial next year.
Lynette Robbins and her company Knowles Systems raised about $147 million from investors by advising them that the investments in Woodbridge were “safe and secure.” Floyd Powell was also barred by the SEC from selling securities; he sold Woodbridge notes to 13 investors and consented to a settlement without admitting or denying the allegations.
Stephen Condon Peters was sentenced to 40 years in prison and ordered to repay investors $15 million for a note Ponzi scheme through VisionQuest Wealth Management.
Shayeh Dov was sentenced to over 7 years in prison and ordered to pay $3 million in restitution to investors in his note fund that did not own any notes. Dov spent the money on lavish indulgences.
Terry Wayne Kelly Jr. and Kelly Management were charged by the SEC in connection with selling notes in a Ponzi scheme fund called Madison Timber Properties.
Vincent P. Falci was sentenced to 15 years in prison for running a $10 million tax lien fund Ponzi scheme. Falci defrauded victims through Saber Funds andVicor Tax Receivables, providing fake investment gains on every monthly statement. Falci diverted the funds to himself.
Kevin Merrill of Delmarva Capital and his partners Jay Ledford and Cameron Jezierski pleaded guilty to running a $550 million Ponzi, enticing investors to buy into a fund of consumer debt portfolios. But there were no portfolios. Merrill used investors’ money to buy 25 super-luxury cars and 6 homes, among many other things. They face decades in prison.
James Nickels collected more than $5 million from investors in his phony note fund The Fiscal Concierge.
McKinley Mortgage note fund officials Tobias, Charles and Caleb Preston agreed to pay over $3 million in fines and repay investors some $30 million after the SEC charged them with misusing funds. The SEC asserts that the company lost money for years and was insolvent by 2012. Still, the SEC says, the fund kept raising money and providing false documents to investors claiming the fund generated strong annual returns.
Phillip Michael Carter was accused by the SEC of running a note fund Ponzi that raised $45 million. The alleged scheme was run with Bobby Eugene Guess and Richard Tilford and defrauded 270 investors. Carter and Tilford were indicted last year, and Guess is currently serving a 12-year prison sentence after pleading guilty to a similar note fund fraud.
There are many more. These are just some of the most recent ones. This is why we do not permit note funds to advertise with us or to exhibit at our events (www.PaperSourceSeminars.com). Doubtlessly there are some honest funds, but I’m not a fortune teller, and I doubt you are, either. ALWAYS take title to your notes.
Shayeh Dov was sentenced to over 7 years in prison and ordered to pay $3 million in restitution to investors in his note fund that did not own any notes. Dov spent the money on lavish indulgences.
Terry Wayne Kelly Jr. and Kelly Management were charged by the SEC in connection with selling notes in a Ponzi scheme fund called Madison Timber Properties.
Vincent P. Falci was sentenced to 15 years in prison for running a $10 million tax lien fund Ponzi scheme. Falci defrauded victims through Saber Funds andVicor Tax Receivables, providing fake investment gains on every monthly statement. Falci diverted the funds to himself.
Kevin Merrill of Delmarva Capital and his partners Jay Ledford and Cameron Jezierski pleaded guilty to running a $550 million Ponzi, enticing investors to buy into a fund of consumer debt portfolios. But there were no portfolios. Merrill used investors’ money to buy 25 super-luxury cars and 6 homes, among many other things. They face decades in prison.
James Nickels collected more than $5 million from investors in his phony note fund The Fiscal Concierge.
McKinley Mortgage note fund officials Tobias, Charles and Caleb Preston agreed to pay over $3 million in fines and repay investors some $30 million after the SEC charged them with misusing funds. The SEC asserts that the company lost money for years and was insolvent by 2012. Still, the SEC says, the fund kept raising money and providing false documents to investors claiming the fund generated strong annual returns.
Phillip Michael Carter was accused by the SEC of running a note fund Ponzi that raised $45 million. The alleged scheme was run with Bobby Eugene Guess and Richard Tilford and defrauded 270 investors. Carter and Tilford were indicted last year, and Guess is currently serving a 12-year prison sentence after pleading guilty to a similar note fund fraud.
There are many more. These are just some of the most recent ones. This is why we do not permit note funds to advertise with us or to exhibit at our events (www.PaperSourceSeminars.com). Doubtlessly there are some honest funds, but I’m not a fortune teller, and I doubt you are, either. ALWAYS take title to your notes.
