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Jimmy Sodhi / Jimmy Singh

Investors are nearly $2.4 million poorer and Janamjot Singh Sodhi has earned himself an almost 5 year stay at Club Fed, thanks to a Ponzi scheme carried out through a company called Elite Financial Inc.  The fraudster also used the names Jimmy Singh or Jimmy Sodhi.

The scheme ran from 2005 through September 2011, Like any typical Ponzi scheme, Sodhi solicited investors with the promise of high rates of return, and used new investor money to pay “returns” to old investors. At the same time, Sodhi siphoned off money for himself.

Here’s where it gets interesting… Sodhi previously had a license to sell investments, but it was revoked in 2005. In 2006, he was permanently debarred by the New York Stock Exchange. And in 2009, Jimmy Sodhi was ordered to cease and desist all investment advisor activity in California.

The Mormon Madoff: How Shawn Merriman Scammed Millions

American Greed on CNBCOn this season of American Greed, CNBC profiles Shawn Merriman.

ByJenna Martino
CNBC Associate Producer

Shawn Merriman was head of an investment firm and lay bishop in the Mormon church who persuaded friends, family, and church members to invest with him. It turned out to be a big scam, taking in more than $21 million. Among victims: his own mother.

The Ponzi scheme, which continued for 15 years, landed Merriman behind bars, and his investors out of money.

Bank Liability for Ponzi Schemes

An article in a recent edition of the Bloomberg BNS Banking Report on Ponzi Schemes and bank liability referred to an article I wrote on recognizing red flags of Ponzi schemes:

Under each, a plaintiff must account for both the plaintiff’s failure to investigate the would-be fiduciary before investing with the fiduciary and the plaintiff’s failure to monitor the fiduciary’s activities subsequent to the investment. As to the first, there are often many red flags to alert an investor to a Ponzi scheme that reasonable investors should notice and that many investors choose to ignore in pursuit of high returns. Fraud detection expert Tracy Coenen has noted more than fifteen red flags signaling a Ponzi scheme that any investor could spot with a reasonably diligent (and fairly simple) investigation. These items include:

Red Flags Pointed Directly to Madoff

It’s hard to believe that a Ponzi scheme as massive as the one perpetrated by Bernard Madoff got by anyone. Surely he was the most clever criminal alive, and was ingenious at hiding his fraud. There couldn’t have been any signs of the scam he was running. Or were there?

It turns out there were plenty of red flags pointing squarely at the scheme Madoff was running. It was clear years ago to Harry Markopolos, the author of “No One Would Listen: A True Financial Thriller.”Markopolos was the whistleblower who went to the Securities and Exchange Commission on several occasions with his suspicions about Bernie Madoff. But he wasn’t an investment expert who was “just jealous” of Madoff’s apparent success in generating high earnings for his clients quarter after quarter. He was a numbers wizard who had concrete proof the Madoff’s “investment strategy” couldn’t be anything like what he (or others) said it was.

Ponzi Scheme and Investment Fraud Red Flags

Charles Ponzi

How do you know if you’re considering investing in a Ponzi scheme? The promoters will never come out and tell you they are running a pyramid scheme, so the investors have to be smart enough to recognize them on their own. The good news is it is easy to spot a Ponzi scheme.

Now I don’t mean that it’s easy to prove in a court of law that something is a Ponzi scheme. In a civil or criminal case, there are certain standards of proof that need to be met. But you’re not a court. You’re simply an investor. Whether you have $10,000 to invest or $10 million to invest, your money is probably pretty important to you.

Unraveling a Ponzi Scheme: Forensic Accountant Needed

Ponzi Scheme Forensic AccountantIt has become commonplace to hear news stories of Ponzi schemes being uncovered. Investment scams and Ponzi schemes are all too common. Investors are lured in with promises of high returns. People in or nearing retirement find these investments enticing, especially as their retirement funds in the stock market have taken many hits in the last few years.

As I wrote in my book Expert Fraud Investigation: A Step-by-Step Guide, investors are becoming victims of these scams despite the proliferation of information available about phony investment schemes and the dire warnings given regularly by news reporters.  Perpetrators of investment schemes dream up stories explaining their unusually high rates of return on money, and get high net worth people to invest with them. Often these people are investing their entire savings with scammers.

SEC Discards Documents Regarding Matters Under Investigation (MUIs) According to Agency Policy

The big buzz this week is an article in Rolling Stone regarding the SEC’s policy of destroying documents related to Matters Under Investigation (MUIs) which do not result in any agency action being taken.

At first blush, it may appear to be some sort of cover up, and that’s exactly what Rolling Stone writer Matt Taibbi wants you to think. Under further scrutiny, however, it appears that nothing improper is being done. All smoke, and no fire.

Daughter Turns in Mom in Tri Energy Ponzi Scheme

More than two years ago, I mentioned here a news story about a Ponzi scheme called Tri Energy Inc. The Securities and Exchange Commission first took action against the company in 2005:

The Securities and Exchange Commission yesterday obtained a temporary restraining order, an asset freeze, and other emergency relief, in a civil action filed against several individuals and entities alleged to be perpetrating an ongoing affinity fraud and Ponzi scheme. According to the Complaint, defendants have defrauded hundreds of investors of over $12 million by promising returns of 100% or more within 60 days. The Complaint alleges that defendants have been telling investors that these extraordinary profits were to be generated in part by helping an unnamed Saudi Arabian prince move gold from Israel through Luxembourg to the United Arab Emirates. In reality, according to the Complaint, although some money has been paid out to investors, these funds appear to have come from new investor money, and substantial amounts of investor funds have been transferred to bank accounts controlled by the proposed defendants and relief defendants.

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