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A $600,000 settlement between Bernard Madoff’s wife and the trustee raising money for victims of the con man was approved by a New York judge, resolving a decade-old lawsuit against the former socialite, Bloomberg News reported. The deal, reached May 3, was approved Tuesday by U.S. Bankruptcy Judge Stuart Bernstein. Under the agreement, Ruth Madoff will make an upfront cash payment of $250,000 to a fund for victims and transfer another $344,000 from accounts she set up for her grandchildren. She also agreed that all her remaining assets would be transferred to the trustee after she dies. Ruth Madoff, who’s been living quietly out of the public eye since her husband began serving a 150-year prison term, was accused in 2009 of getting $44 million in phony profit from her husband’s $20 billion Ponzi scheme. She long denied the claims and has always said she didn’t know about the fraud. The couple earlier agreed with federal prosecutors to forfeit their homes, financial holdings and other property, though Ruth Madoff was allowed to keep $2.5 million. That deal didn’t preclude the trustee, Irving Picard, from going after the money. Read more. 

To learn more about the ongoing efforts of SIPC recoveries in the Madoff case, be sure to listen to this ABI Podcast. 

The U.S. Securities and Exchange Commission (SEC) has taken action against what it alleges is a $30 million cryptocurrency scam based around supposed diamond investment, CoinDesk.com reported. The SEC alleged that defendant Jose Angel Aman operated a purported crypto business called Argyle Coin as a Ponzi scheme, using investments from new recruits to pay returns to previous investors. According to the SEC complaint, Aman is said to have fleeced over 300 investors since May 2014 by selling unregistered securities in two other firms he owns: Natural Diamonds Investment Co. (Natural Diamonds) and Eagle Financial Diamond Group Inc. He “falsely promised” investors that the firms would invest in whole diamonds to cut down and sell for substantial profits, the SEC said. He was allegedly assisted in the scheme by Harold Seigel and Jonathan H. Seigel, who also had interest in the two firms.

Michael Avenatti’s legal troubles deepened after the embattled lawyer was indicted on charges of fraud and aggravated identity theft for allegedly stealing the advance on a book deal from the porn actress Stormy Daniels, his most famous client, and using the money on personal expenses like a monthly car payment on a Ferrari, Bloomberg News reported. The indictment by a federal grand jury, announced Wednesday by prosecutors in Manhattan, also charges Avenatti with extorting millions of dollars from Nike Inc., an allegation first made in March when the attorney was arrested outside the New York offices of the shoemaker’s law firm. Avenatti faces criminal prosecution in two states. In California, he was indicted in March on three dozen charges, including a claim that he stole millions of dollars from a paraplegic client’s settlement with Los Angeles County. In New York, he is accused of lying and forging documents to persuade a literary agent to divert money owed to his client to an account he controlled. Avenatti used the money for personal and business purposes, according to the indictment.

U.S. Attorney Josh J. Minkler on Friday announced that a federal grand jury has indicted Brian Fenner and Dennis Birkley with conspiracy to commit mail, wire, and bank fraud, according to a DOJ press release. The indictment alleged that Fenner and Birkley conspired to wash motor vehicle titles of bank liens and sell the vehicles for personal profit. According to the indictment, Fenner targeted financially distressed individuals who were upside down on their auto loans. He allegedly promised to pay their bankruptcy attorneys’ fees if they turned their vehicles over to him. The indictment alleges that between 2013 and 2016, numerous individuals from all around the United States signed on with Fenner and had their vehicles towed to and stored on Fenner’s lots in Indianapolis, in exchange for what they thought would be a “free” bankruptcy. 

The Securities and Exchange Commission over the five years ending in 2018 took in 55 percent of the $20 billion in enforcement fines set through settlements or court judgments, according to agency statistics, the Wall Street Journal reported. During the prior five years, from 2009 through 2013, the SEC collected on 60 percent of $14.6 billion. And in 2018, the commission collected just 28 percent of almost $4 billion. That rate — the lowest in a decade — was due in part to an unusual $1.7 billion settlement with the Brazilian oil company Petrobras that may never require payment to the SEC. The SEC has struggled for years to get defendants to pay more of their fines, although some are almost certain to avoid payment forever. That includes people who went to prison on related criminal charges, or people behind Ponzi schemes who spent the funds they took from defrauded investors.

A career con man in California pleaded guilty yesterday in a federal fraud case stemming from a real estate scam that targeted distressed homeowners, many of whom were elderly individuals who were scammed out of their homes, losing significant equity in the properties accumulated over the course of their lifetimes and sometimes over the course of generations of home ownership, according to a press release from the U.S. Attorney's Office for the Central District of California. Michael “Mickey” Henschel of Van Nuys, Calif., pleaded guilty to mail fraud in relation to the scheme that generated more than $17 million in profits and caused homeowners to suffer approximately $10 million in losses when they lost title to their homes and when they were defrauded into giving Henschel and his co-conspirators money as part of the scam. Henschel’s fraudulent conduct also caused losses to mortgage lenders and purchasers of foreclosed properties. With another defendant pleading guilty today, a total of seven conspirators linked to Henschel’s Van Nuys-based businesses have now pleaded guilty in the scheme that used fraudulent deeds to steal properties from homeowners, and also charged homeowners illegal fees to delay foreclosure and eviction actions.

A nonprofit called Mined Minds promised to teach West Virginians how to write computer code and then get them well-paying jobs, was looking for recruits, according to a New York Times report. Sen. Joe Manchin III (D-W.Va.) had invited the group to come into the state. The National Guard hired it to teach at its military-style academy. County commissioners arranged space rent free. However, almost none of those who signed up for Mined Minds are working in programming now. They described Mined Minds as an erratic operation, where guarantees suddenly evaporated and firings seemed inevitable, leaving people to start over again at the bottom rungs of the wage jobs they had left behind. More than two dozen former students in West Virginia are pursuing a lawsuit, arguing that Mined Minds was a fraud.

Ruth Madoff agreed to pay nearly $600,000 and pledged to surrender her remaining assets when she dies under a settlement with the liquidating trustee cleaning up after the Ponzi scheme perpetuated by her husband, Bernard Madoff, WSJ Pro Bankruptcy reported. Madoff, who was never charged with any crime pertaining to her husband’s $20 billion fraud, will pay $250,000 in cash and hand over two New York trusts for her grandchildren that are valued at $344,000, according to settlement documents filed on Friday in the U.S. Bankruptcy Court in Manhattan. She also will transfer her remaining assets at the time of her death to liquidating trustee Irving Picard, who has spent the past decade suing people and institutions linked to the sham investment firm Bernard L. Madoff Investment Securities LLC to dig up money for its investors. After the forfeiture of her and her husband’s properties, the U.S. government agreed to let her keep $2.5 million, but that didn’t resolve Picard’s claims against her. Until her death, Madoff, 77, can spend her money on “reasonable living and medical-care payments,” according to the settlement. Read more. 

Be sure to listen to ABI's latest podcast as ABI Editor-at-Large Bill Rochelle talks with Josephine Wang, president and CEO of the Securities Investor Protection Corp. (SIPC), about recovery efforts in the Madoff case.