Latest news with #PonziScheme
Yahoo
an hour ago
- Business
- Yahoo
Former Mountain Express CFOs say retailer's sale-leaseback strategy reflected a Ponzi scheme
This story was originally published on C-Store Dive. To receive daily news and insights, subscribe to our free daily C-Store Dive newsletter. Even with Mountain Express Oil's former leaders expected to stand trial for fraudulent activities that led to the company's collapse, federal regulators continue to investigate what happened during the company's growth spree between 2020 and 2023. In affidavits filed earlier this month in the U.S. District Court in the Northern District of Georgia, two former Mountain Express chief financial officers characterized the company's growth strategy as similar to a Ponzi scheme — a type of security fraud that involves the payment of purported returns to existing investors from funds contributed by new investors, according to the Securities and Exchange Commission. Walter Vic Lacy and John Scott, who separately held the role of CFO at Mountain Express between 2020 and 2022, said the company's sale-leaseback strategy showed gains on a surface level, but those gains were far outstripped by the rents and other expenses associated with operating its nearly 300 c-stores and fuel distribution business. Atlanta-based Mountain Express would acquire convenience stores and almost immediately resell them for a considerably larger price, often to real estate investment trusts, who would lease the locations back to Mountain Express via long-term agreements at inflated rental rates. Both CFOs said that although Mountain Express treated the difference in these transactions as gains on its financial statements, they were not truly gains on its income. Instead, the money was 'akin to cash inflows from financing that needed to be rapid with interest,' both CFOs said. The CFOs added that Mountain Express did not earn sufficient income from its fuel distribution and c-store businesses to pay the debts it incurred during its growth spree. As a result, the company engaged in more sale-leaseback deals to pay down these debts, both CFOs said. Scott said that Mountain Express's growth strategy 'is consistent with my general understanding' of how a Ponzi scheme could work, and Lacy concurred. 'Looking back at MEX's operations in hindsight, it had characteristics of a Ponzi scheme in that MEX was using funds from new sale-leaseback transactions to pay debts incurred through prior sale-leaseback transactions and owned under the credit agreement,' Lacy said in his affidavit. While Ponzi scheme penalties vary by severity, in the state of Georgia, offenders can face up to 20 years in prison, according to law firm Grisham, Poole & Carlile. Both CFOs said that based on their reviews of Mountain Express' financial statements between 2018 and 2021, the company was 'operationally insolvent' during this entire period. 'As time went on, Mountain Express had to accelerate its sale-leaseback transactions to obtain more and more funds to cover its debts, which only grew as Mountain Express had to pay increasing rents and other payments from prior sale-leaseback transactions,' Scott wrote in his affidavit. With Lacy's and Scott's testimonies, three former Mountain Express CFOs have now spoken out against the company's financial dealings. In May 2024, Gina Zamarelli, who was hired as Mountain Express' CFO in late 2022, testified that the company's former co-CEOs, Lamar Frady and Turjo Wadud, siphoned company funds while they were leading the convenience retailer. Earlier this year, Wadud and Frady, as well as Mountain Express founder Barry Bierenbaum, were summoned to a trial by jury in the U.S. federal court in Atlanta for siphoning more than a hundred million dollars from the company between 2020 and 2023. No updates regarding a trail date have been released. Recommended Reading 'Epic failure:' Inside the rise and fall of Mountain Express Oil Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Fox News
3 days ago
- Business
- Fox News
Victims of 'Bernie Madoff of cows' take on major banks in massive ghost cattle Ponzi scheme
Victims of a deceased financier known as the "Bernie Madoff of cows" are suing three banks, alleging they enabled the fraud that resulted in a $100 million Ponzi scheme. Some of those duped by Brian McClain, of Benton, Kentucky, filed a lawsuit against Community Financial Services Bank, Rabo AgriFinance and Mechanics Bank, alleging the institutions ignored red flags that left dozens of Kentucky investors with financial losses, the New York Post reported. The fraud was uncovered days after McClain killed himself at age 52 on April 18, 2023. He initially promised 30% returns to investors while orchestrating a "ghost cattle" scheme in which the livestock never actually existed, authorities said. "CFSB strongly denies the allegations in question, and believes the claims against the bank to be entirely without merit," the bank said in a statement to The Post. "The bank through counsel has filed a Motion to Dismiss in the suit brought by the bankruptcy trustee." A spokesperson for Rabo AgriFinance told Fox News Digital that the courts will have the ultimate say. "Rabo AgriFinance remains strongly committed to providing financial solutions to U.S. cattle producers, feedlots, and processors," a statement from the bank reads. "As stated in prior court filings, the claims have no basis under the law, and many of the allegations are completely inaccurate. As the legal process unfolds Rabo AgriFinance will refrain from commenting further." Fox News Digital has reached out to all three banks named in the lawsuit. McClain's scheme collapsed when Rabo AgriFinance, McClain's primary lender, discovered a massive discrepancy in inventory, the newspaper reported. During an audit, only 10,000 cattle were found, far less than the 88,000 McClain claimed to have. While McClain claimed to have 88,000 head of cattle, only about 10,000 were found during an audit, exposing the bulk of the herd as "ghost cattle." After McClain's death last year, representatives from Rabo AgriFinance seized the remaining cattle from McClain's operation and sold them through Blue Grass Stockyards. Three of McClain's companies — McClain Farms in Benton, Kentucky; 7M Cattle Feeders in Hereford, Texas; and McClain Feed Yard in Friona, Texas — filed for bankruptcy in 2023. The unpaid livestock sellers could be protected under the Packers and Stockyards Act of 1921, which requires that all livestock purchased by a dealer in cash sales, along with any receivables or proceeds from those livestock, be held in trust for the benefit of unpaid sellers, according to the Department of Agriculture. McClain's moniker is named after Bernie Madoff, the former Nasdaq chairman who masterminded the largest Ponzi scheme in U.S. history by defrauding thousands of investors. Madoff died in 2021 at the age of 81 while serving a 150-year sentence at the federal medical care center in a North Carolina federal prison.
Forbes
4 days ago
- Business
- Forbes
British Citizen Charged With $99 Million Wine Fraud
A police mug shot of Italian-born American swindler Charles Ponzi (1882 - 1949) after his arrest for ... More forgery under the name of Charles Bianchi, Montreal, Canada, 1909. Ponzi later served 14 years in jail in the US after the collapse of his fraudulent investment scheme, whereby early investors were paid from the investments of later investors. Such frauds have since been known as Ponzi schemes. (Photo by Pictorial Parade/) Charles Ponzi has been dead for 76 years but the scam that carries his name still lives on. On July 11th James Wellesley was arraigned and pleaded not guilty in Federal Court in New York City on wire fraud and money laundering charges related to what the FBI is calling a $99 million Ponzi scheme involving wine investment fraud. According to the FBI, James Wellesley and his co-defendant Stephen Burton operated the scam between June of 2017 and February of 2019 during which time they represented to unwary investors that their company, Bordeaux Cellars brokered loans to high-net-worth wine collectors. These loans were purportedly secured by valuable wines such as Domaine de la Romanee-Conti and Chateau Lafleur stored by Bordeaux Cellars as collateral for the loans. Burton and Wellesley allegedly promised their targeted investor victims who they encountered at investment conferences both in the United States and abroad that they would receive returns of 48% annually through regular interest payments and, in fact, some of the early 'investors' did receive some payments, but those payments, as is typical in a Ponzi scheme came from funds obtained from more recent victims of the scam. The truth, according to the FBI, is that there were no loans and Wellesley and Burton held no valuable wine collections as collateral for the non-existent loans. Eventually when interest payments stopped, the scam investor victims in the Ponzi scheme became suspicious and following an investigation by the FBI both Burton and Wellesley were charged with wire fraud and money laundering. Both men fled the country with Burton being arrested in Morocco and extradited to the United States in 2023 and Wellesley arrested in the UK and extradited to the United States in early July 2025. FBI agent Ricky Patel commented on the case, 'James Wellesley and his co-conspirator are accused of masterminding their nearly $100 million international fraud scheme that exploited the unsuspecting public, including New Yorkers, for their own selfish enrichment." But what are the lessons of this scam for investors? What should these unsuspecting members of the public have done differently that might have prevented themselves from being scammed? First and foremost, no one should ever invest in any investment that they do not truly understand, and no one should ever invest with any person or company without vetting that person or company. No one enjoys doing homework, but if the investors in this scam had done their homework they would have learned that the company Bordeaux Cellars had no significant legitimate business history In addition, if Bordeaux Cellars was a legitimate investment company, it would have been registered with the SEC, which it was not. Further, neither James Wellesley nor Stephen Burton had experience in wine finance. Investors should have asked for an independent verification of the inventory of wines that Wellesley and Burton claimed to be holding as well as storage documentation from the wine storage facility where the wines were claimed to be held. Additionally, they should have confirmed any insurance policies on the rare wines or ownership records of the wines. Finally, a telltale sign of an investment scam is a return that is unusually high, and the 48% annual return promised by Wellesley and Burton certainly should have been a cause for skepticism. If convicted, both Wellesley and Burton face prison sentences of up to 20 years.
Yahoo
6 days ago
- Business
- Yahoo
Officials probing Georgia GOP donor accused of $140 million Ponzi scheme
The Securities and Exchange Commission and Georgia officials are investigating a Georgia businessman and GOP supporter accused of perpetrating a Ponzi scheme defrauding hundreds of investors out of more than $140 million, and using some of the money for political donations. Authorities have accused Georgia-based Liberty Building & Loan and its owner Edwin Brand Frost IV of defrauding more than 300 investors. According to a complaint filed by the SEC, Frost "misappropriated a significant amount" of the company's investor assets, including $570,000 in investor funds used to make political donations. MORE: How far would a wife go to keep $2M Ponzi scheme a secret? The complaint also said $335,000 in investor funds was paid to a rare coin dealer, $230,000 was used to rent a vacation home in Kennebunkport, Maine, $140,000 was used to purchase jewelry and $20,800 was used to purchase a Patek Philippe watch. "Given that First Liberty was operating at a loss, Frost was not entitled to these funds according to what he told investors as to how he would be compensated," the civil complaint, filed in Georgia on Thursday, said. According to the complaint, Frost and his companies in part told investors their funds would be used to make short-term small business loans, and that they would receive large returns. "Beginning no later than 2021, First Liberty began operating as a Ponzi scheme," the complaint alleged. The complaint alleged the company started soliciting funds first from "friends and family," but last year "started a more widespread public solicitation of potential advisors," advertising on radio and podcasts. According to the complaint, "Most, if not all, of the funds raised through the publicly advertised offering were either misappropriated or used to make Ponzi-style payments to existing investors." Frost, in a statement provided by his attorney, said he takes complete responsibility and is working to pay back investors. "I take full responsibility for my actions and am resolved to spend the rest of my life trying to repay as much as I can to the many people I misled and let down," Frost said in the statement. "I will be cooperating with the receiver and federal authorities and ask that everyone allow the receiver time to sort things out and do his best to repair the damage I created. I would like to apologize personally to those I have harmed." A message on the company's website said it had "ceased all business operations" and is "cooperating with federal authorities as part of an effort to accomplish an orderly wind-up of the business." Georgia Secretary of State Brad Raffensperger said in a statement that his office has an "active and ongoing investigation" and encouraged any potential victims to come forward "immediately." MORE: Bernie Madoff's victims to receive final payout totaling $131 million An FBI official told ABC News, "The FBI is aware of the allegations. However, the FBI does not comment upon the existence or the nonexistence of any investigation. Anyone who believes they have information about the matter can file a complaint at On Friday, a judge in Georgia entered an order freezing the defendants' assets, among other measures. The SEC said the defendants had consented to the move "without admitting or denying the allegations in the complaint." ABC News' Luke Barr contributed to this report.
Yahoo
6 days ago
- Sport
- Yahoo
Disgraced Miami Booster Makes Admission About Placing Bounty on Tim Tebow
Disgraced Miami Booster Makes Admission About Placing Bounty on Tim Tebow originally appeared on Athlon Sports. Former Miami Hurricanes booster Nevin Shapiro doesn't blame fraud for being the reason why he was imprisoned. No, his 20-year sentence for a Ponzi scheme is the fault of former Florida Gators quarterback Tim Tebow. Advertisement 'I set a bounty on Tim Tebow and I think God made me pay for it by sending me to prison,' Shapiro said during a conversation with Anthony Mo Hasan last month. 'You know, I'm not kidding. I thought about this when I was locked up. Like, 'I wonder if that bounty I set on Tim Tebow … really cost me my freedom.' I didn't pay it out because we didn't collect. They didn't collect, but I set a bounty on him.' Shapiro put a target on Tebow, at the time the reigning Heisman Trophy winner, during Miami's battle with the eventual BCS national champion Gators in 2008. If Randy Shannon's defense was trying to hurt the famed Florida passer, it was to no avail. Tebow went 21 for 35 for 256 yards and a pair of touchdowns through the air. He ran through the Hurricanes' defense for 55 yards on 13 carries, as well. Florida Gators quarterback Tim Tebow (15) looks to throw against the Florida State Seminoles during the second quarter at Doak Campbell Stadium in Tallahassee, Florida© John David Mercer-USA TODAY Sports 'I'll never go his route, his way again,' Shapiro said. 'That was it, man. I went away for 10 years. I think it's because of that. … I'm glad I didn't put a bounty on (Aaron) Hernandez. He might've came back for me in real life." Advertisement Worth noting, Hernandez reeled in five passes for 58 yards and a 14-yard touchdown on the Gators' first possession. Miami finished that season with a 7-6 mark, part of a 13-year stretch in which the Hurricanes failed to win at least 10 games during a single season. Related: Florida Dealt Huge Recruiting Loss by National Championship Contenders This story was originally reported by Athlon Sports on Jul 8, 2025, where it first appeared.
