Duration: 75 minutes
This course discusses several major Ponzi schemes in the news, most notably those organized by: Bernard Madoff carried out his $50 billion scheme against thousands of victims through Bernard L. Madoff Investment Securities LLC. He had been chairman of the NASDAQ stock exchange, Chairman of the Board of Directors and on the Board of Governors of the National Association of Securities Dealers. Customer account statements disclosed investment transactions and returns, but they were fictitious. Beginning in the 1990s or earlier, the scheme was perpetuated until its collapse in December of 2008. Madoff was sentenced to 150 years. Allen Stanford created the Stanford International Bank in Antigua, which issued and sold approximately $8 billion in fraudulent certificates of deposit, and then falsified the bank's records to conceal the fraud. He was convicted on March 6, 2012 of orchestrating a Ponzi scheme valued at approximately $7 billion dollars and was sentenced to 110 years. Marc S. Dreier, a New York lawyer, was arrested in December 2008 for selling fraudulent promissory notes to investors, which allegedly provided short-term financing for real estate projects. From 2004 to 2008, Dreier received approximately $113 million in investor funds and deposited virtually all of them into an attorney trust account held by his law firm. Dreier was sentenced to 20 years. The Bayou Group was founded by Samuel Israel, III along with two others in 1996. From 1998 to 2005, to cover its losses and mislead existing and new investors, Bayou issued false financial statements and audit reports. Investors lost $450 million. Israel was sentenced to 20 years. Thomas Petters orchestrated a $3.65 billion Ponzi scheme that solicited investments from over 400 investors from 1995 to 2008 to provide funding for the purchase of fictitious merchandise which was to be resold to various retail companies. Petters was sentenced to 50 years. Scott Rothstein, a Florida attorney, ran a $1.2 billion scheme out of his law firm, Rothstein Rosenfeldt & Adler P.A., by selling shares in fabricated legal settlements. From 2005 until 2009, Rothstein persuaded investors to loan money to nonexistent borrowers based on requests for short-term bridge loans and to invest funds based on anticipated payouts from purported civil settlement agreements. Rothstein was sentenced to 50 years.
Taught by experienced national experts on the subject, Judge Steven Rhodes and Kathy Bazoian Phelps, this class further examines the nature of these schemes, the dollar amounts involved, the number of investors, and important, common, warning signs of fraudulent activity. The course will also focus on a number of key legal issues surrounding Ponzi schemes such as fraudulent transfers, good faith defenses, Section 546(e) defenses, preferences, forfeiture, and claims allowance and distribution.
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