Ponzi Nation: Sports Talk “Webio” Edition

I’ve been remiss in my tracking Ponzi schemes of late, failing to note this scheme whereby a guy created a Ponzi to fund his Chicago-based sports talk "webio."

The Securities and Exchange Commission today obtained a court order halting an $11 million Ponzi scheme in which a Chicago-based promoter who is a convicted felon promised investors unusually high returns from purported investments in payday advance stores.

The SEC alleges that David J. Hernandez, who was convicted in 1998 for wire fraud arising from his previous employment at a bank, sold "guaranteed investment contracts" through his company that, unbeknownst to investors, was actually out of business. Hernandez promised returns of 10 percent to 16 percent per month and made false and misleading statements about his background, the use of investor proceeds, and the safety of the investment. Among Hernandez’s illicit uses of investor funds was to start up a Chicago sports-talk Web site called "Chicago Sports Webio" featuring Chicago-area sports figures and reporters.

"Hernandez bilked investors out of funds that he led them to believe were being invested properly and safely," said Merri Jo Gillette, Director of the SEC’s Chicago Regional Office. "Instead, he was paying investors in Ponzi-like fashion to keep his scheme afloat while he used their money for personal expenses and to start an online sports talk venture."

 But with two more Ponzis shut down today, I felt I owed you an update.

Michael Regan’s fake MBA:

The SEC alleges that Michael C. Regan and his firm, Regan & Company, fraudulently obtained at least $15.9 million from dozens of investors nationwide by selling securities in his now defunct River Stream Fund. Regan provided fake account statements and tax forms to investors showing artificially inflated account balances and concealing that he did no securities trading at all for several years and suffered substantial losses on investments that he did make. Regan falsely claimed that he earned an MBA from a major New York university and promoted a phony track record of successful securities trading and investment expertise. Regan is not registered as an investment adviser with the SEC or any other securities regulator.

Advanced Money Management:

The SEC alleges that Moises Pacheco, Advanced Money Management, Inc. (AMM), and Business Development & Consulting Co. (BD&C) raised $14.7 million from more than 200 investors over a 3½-year period, acting as investment advisers to the five self-described hedge funds — AP Premium Value Funds I through IV and Capital Partnership Group.

According to the SEC’s complaint, Pacheco told investors that he had developed a lucrative investment strategy involving the purchase and sale of covered call options, and that the hedge funds exclusively relied upon this strategy to generate trading profits ranging from 30 percent to 48 percent per year. In reality, Pacheco did not generate the returns he claimed to have made, and instead used investor principal to pay purported returns until the scheme collapsed.

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7 replies
  1. BoxTurtle says:

    The government hates competition. Social Security is the only LEGAL Ponzi scheme.

    Boxturtle (Who’s done more for accounting: Ponzi or FASB?)

  2. Jkat says:

    you’d think ..that with the plethora of these things having popped up ..that people would e a bit more discerning about who and what they are/were “investing” in …

    P.T. Barnum was right …

    • freepatriot says:

      you’d think that people would be a bit more discerning

      maybe

      or not

      with the right smile, in the middle of a bubble economy, you could sell shares in “Ponzi’s Investments” and half of the suckers in this country would never make the connection

      I haven’t studied economics, but I’ve run across some economic history in my reading. the recent collapse of a bubble economy doesn’t seem all that different than any other bubble failure

      people get caught shoveling money into investments they have no clue about, based on the idea that they can sell the investment for twice the value in the near future

      ever read about the San Francisco stock market in the 1800s, or the Los Angeles real estate booms ???

      it’s all so predictable …

  3. Waccamaw says:

    Y’know…….it never ceases to amaze me the apparently vast number of people who think they’re gonna be the ones to cash in on the magic golden egg. Call it the “Lotto Winner” mentality.

    CNN had a *really* weird interview segment on this morning about some older woman in Florida currently living in an unbelievably well-furnished co-op?apartment? and she was wearing this exotic floor-length at-home gown and she’s standing on the balcony with a killer view of whatever city it is. Turns out she and the hubby got taken to the cleaners in some Ponzi scheme and they’re gonna be foreclosed on tomorrow. She talked about how now when she’s got and about and she see homeless people living under bridges or people holding “will work for food” signs beside the highway, she thinks to herself, “That’s gonna be us tomorrow”.

    Would the thought EVER have crossed her mind a year ago, “That could be me”…….when she had the money to actually help such people? But now she’s crying in her beautiful home that will belong to somebody else tomorrow. I’m not a nice person…….could not manage to squeeze a drop of sympathy out of my heart for her plight.

    • JohnJ says:

      It has mostly past now, but that was how the “we won WWII for you” generation thought. Once they were vested, they couldn’t fail, just improve.

      I personally think it goes to this con-job that the oligarchs have been playing on the populous.

      As an example I work with a father/son team of former mortgage broker/closer. Both now work for less than $10/hr. The father has owned several businesses. He actually commented the other day that the Rich should get privileges that the rest of us don’t because of all they do for us????? He actually sited “trickle down” as one reason.

      Poor guy doesn’t understand what end of the food chain he is on, and always has been.

      (BTW, both are great people who will help ANYONE out, just confused as to cause and effect)

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