%1

Chris Chapman used to own one of the most valuable commodities in the crypto world: a unique digital image of a spiky-haired ape dressed in a spacesuit, the New York Times reported. Chapman bought the nonfungible token (NFT) last year, as a widely hyped series of digital collectibles called the Bored Ape Yacht Club became a phenomenon. In December, he listed his Bored Ape for sale on OpenSea, the largest NFT marketplace, setting the price at about $1 million. Two months later, as he got ready to take his daughters to the zoo, OpenSea sent him a notification: The ape had been sold for roughly $300,000. A crypto scammer exploited a flaw in OpenSea’s system to buy the ape for significantly less than its worth, said Mr. Chapman, who runs a construction business in Texas. Last month, OpenSea offered him about $30,000 in compensation, he said, which he turned down in hopes of negotiating a larger payout. The company has made “a lot of stupid, dumb mistakes,” Mr. Chapman said. “They don’t really know what they’re doing.” Chapman is one of many crypto enthusiasts who have raised questions about OpenSea, an eBay-like site where people can browse millions of NFTs, buy the images and put their own up for sale. In the last 18 months, OpenSea has become the dominant NFT marketplace and one of the highest-profile crypto start-ups. The company has raised more than $400 million from investors, valuing it at a staggering $13.3 billion, and recruited executives from tech giants like Meta and Lyft. But as OpenSea has grown, it has struggled to prevent theft and fraud. The glitch that cost Mr. Chapman his ape has led to months of recriminations, forcing the start-up to make more than $6 million in payouts to NFT traders. Customers also complain that OpenSea is slow to block the sale of NFTs that were seized by hackers, who can turn a quick profit by flipping the stolen goods. And plagiarized art has proliferated on the site, outraging artists who once viewed NFTs as a financial lifeline. The company is facing at least four lawsuits from traders, and one of its former executives was indicted this month on charges related to insider trading involving NFTs.

Embattled San Antonio attorney Christopher “Chris” Pettit and his law firm, accused of defrauding clients of millions of dollars, have filed for bankruptcy protection, the San Antonio News-Express reported. Pettit listed assets of almost $27.8 million and debts of $115.2 million in his individual chapter 11 petition, making it one of the largest individual bankruptcy cases ever filed in San Antonio. His firm, Chris Pettit & Associates, reported assets valued at no more than $50,000. The filings on Wednesday trumped plans by six Pettit creditors to file involuntary chapter 7 cases against him and his firm today, said Raymond Battaglia, their San Antonio bankruptcy lawyer. The bankruptcy lawyer representing Pettit and his firm has indicated he intends to ask the court to appoint a trustee to oversee the debtors’ estates, Battaglia said. “This case is going to require someone who can trace assets and trace transfers and things that (Pettit’s) done with other people’s monies over the last couple of years,” he added. The bankruptcies come after numerous lawsuits against Pettit and his firm, most alleging they stole millions of dollars from clients. He has given general denials in responses to some of the suits, but he and his firm also reached an agreed judgment with some plaintiffs who were awarded — at least on paper — millions in economic and punitive damages. Others allege that they lost far less, but that the amounts nonetheless represent their life savings. The FBI also is investigating. Pettit specializes in estate-planning and personal-injury law, according to his firm’s website.

The United States Attorney’s Office for the Middle District of Pennsylvania announced that Christopher Gambrill of Windsor, Pa., was sentenced on May 26 to 3 years of probation by United States District Court Judge Jennifer P. Wilson for concealing assets during a bankruptcy proceeding. Gambrill was also ordered to pay a $7,200 fine. According to United States Attorney John C. Gurganus, Gambrill previously admitted that in 2016 and 2017, while he was a petitioner in a bankruptcy proceeding, he fraudulently concealed a $125,000 inheritance from the bankruptcy trustee and creditors. Gambrill’s bankruptcy petition was ultimately dismissed, and none of his debts were discharged.

An Alabama man who pleaded guilty to using bank fraud to live an opulent lifestyle that included a private jet and luxury cars like Ferraris and Lamborghinis was sentenced to 15 years in prison and ordered to pay $12 million in restitution, prosecutors said yesterday, the Associated Press reported. Christopher A. Montalbano of Vestavia Hills, Ala., pulled off the scheme over a four-year period that ended in 2020, authorities said in a statement. He pleaded guilty to conspiracy, bank fraud and money laundering in November and was sentenced Tuesday by U.S. District Judge Annemarie Axon. Montalbano used shell companies to take out more than 140 loans worth millions from at least 20 institutions, prosecutors said in a statement. The money went to finance an extravagant lifestyle that included two homes, farmland and multiple real estate holdings in addition to the high-end cars and a jet with a private pilot.

A nonprofit group said on Thursday that it had settled a fraud complaint it filed against New Flyer of America, a bus maker that is a big government contractor in California, the New York Times reported. The nonprofit, Jobs to Move America, accused New Flyer in 2018 of failing to fulfill a commitment the company made to create several dozen jobs above a certain pay rate when it won a contract for hundreds of buses with the Los Angeles County Metropolitan Transportation Authority. According to the legal complaint, which was filed on behalf of the transportation agency and the State of California, the company claimed that it would create more than 50 full-time positions at a facility in Ontario, Calif., more than 90 percent of which would pay at least $18.35 per hour. But documentation uncovered by Jobs to Move America indicated that most workers were making $17 per hour or less early on in the contract. The complaint also accused New Flyer of submitting false information to L.A. Metro about worker benefits. New Flyer is not admitting wrongdoing and will pay $7 million to settle the case, which is likely to be divided evenly between L.A. Metro and Jobs to Move America after expenses like attorneys’ fees are deducted. Madeline Janis, the nonprofit’s executive director, said that it planned to distribute some of the money to workers who had been employed by New Flyer in California. The company also agreed to adopt measures to help ensure better compliance in subsequent contracts with L.A. Metro, including designating a company official trained in tracking wages and benefits to oversee compliance.

Wasim Rehman is a go-to person for investors desperate for an exit in the messy world of trading troubled, hard-to-sell assets — a sector that’s set to explode as sanctions against Russia and the ongoing equities meltdown create mountains of illiquid holdings. But Rehman — who has invested in more than 200 funds in liquidations in the 13 years since retiring at age 28 as the youngest partner of hedge fund giant Marshall Wace — has a message for those tempted by the steep discounts of so-called side-pockets that money managers create to separate out their problem bets: Sometimes it takes more than just patience, Bloomberg News reported. Take his 2014 purchase of claims tied to fraudster Bernie Madoff, mastermind of the biggest financial con job in history. The drawn-out effort to unwind that investment forced Rehman, one of the biggest players in the secretive world of side-pockets, to come out of the shadows, turn activist against the executives responsible for liquidating the assets and even prepare to take his battle to the courts. Rehman says it could still take years before he turns a profit on his bet.

The actor who led a team of teenage superheroes on “Mighty Morphin Power Rangers” has been accused of helping steal millions of dollars from the government’s Paycheck Protection Program pandemic relief fund, the New York Times reported. Jason Lawrence Geiger who played the Red Ranger under the stage name Austin St. John, and 17 others were charged with fraud this week in a Texas federal court over what prosecutors described as a conspiracy to illicitly obtain $3.5 million in PPP loans. Geiger and the others he is said to have worked in coordination with used a mix of genuine and sham businesses to obtain loans from the relief program, prosecutors said. According to court filings, they fabricated documents and made false claims about sales and payroll to obtain inflated loans, then spent the cash on jewelry, precious metals and cars. Geiger received a loan of $225,754 in June 2020 for his company St. John Enterprises, which sells Power Rangers memorabilia, such as $60 autographed photos and $100 personalized video messages. Instead of using the money to pay workers — the relief program’s intended purpose — Geiger funneled most of the money to two of his co-defendants, prosecutors said in court filings.

Federal authorities have accused a North Carolina man of operating a $7 million Ponzi scheme that defrauded at least 75 investors and used the money he gained to make mortgage payments and pay for private schools for his children, the Associated Press reported. The U.S. Securities and Exchange Commission said in a news release that it filed an emergency action Thursday in U.S. District Court. The complaint charges Wynn Charlebois of Charlotte and his company, WC Private, with violating antifraud provisions. According to the SEC’s complaint, Charlebois defrauded the investors since 2019 using multiple bogus investment opportunities. Most of the victims live in the Charlotte area, the news release said. Most recently, through his company, Charlebois offered investors opportunities to share in the profits earned by participating in the exercise of fake options contracts, the SEC said. From May 2019 until last month, Charlebois directed nearly $122,000 in investor funds to a private university where one of his children attends school, the SEC said. He paid more than $65,000 to a private high school where another one of his children attends school and nearly $3,000 to a local social club. He also made more than $8,600 in personal mortgage payments since Dec. 31, according to the SEC.

A California woman serving a life prison sentence for murder led a scheme to collect at least $2 million in unemployment benefits using stolen identities, including those of other incarcerated people, federal prosecutors said, the New York Times reported. The woman, Natalie Le DeMola, was one of 13 people charged with conspiracy to commit wire fraud and bank fraud by collecting unemployment benefits using the personal information of people who were ineligible for the aid, the U.S. attorney’s office in the Central District of California announced on Tuesday. An unnamed prison official provided some of this personal information, such as birth dates and Social Security numbers, by collecting it from California Department of Corrections and Rehabilitation databases, prosecutors said. According to a 39-count indictment, members of the ring filed hundreds of unemployment applications online between June 2020 and April 2021 using the personal information of people, including themselves, who were not eligible for benefits because they were incarcerated, retired or working. Prosecutors said the applications were mostly for pandemic unemployment benefits expanded to help people who had lost work because of the coronavirus pandemic.