Two recent criminal trials highlight the risks in working
for what turns out to be a Ponzi scheme perpetrator. Not only might you lose
money, or be hit with a large civil judgment, but landing in prison is becoming
a reality for some as well.
in the Stanford Financial Ponzi Scheme
In the Ponzi scheme of Stanford Financial Group Co., two
accountants at the firm, ex-Chief Accounting Officer Gilbert Lopez, 70, and
Global Controller Mark Kuhrt, 40, are standing trial in connection with charges
that they helped R. Allen Stanford conceal his Ponzi scheme by creating false
At trial, prosecutors told the jurors that Lopez and
Kuhrt had carefully tracked approximately $2 billion that Stanford had taken
out of the bank for risky private ventures and for personal use. Lopez and
Kurht described their role as involving complicated accounting issues and that
they trusted Stanford's top deputy, finance chief James M. Davis, who himself
pleaded guilty for his role in the Ponzi scheme and is awaiting sentencing. The
defense for Lopez and Kurht stressed that the accountants relied on information
provided by Stanford and Davis and that they did not intend to create false
financial records or break any laws.
If convicted, Lopez and Kuhrt face more than 20 years in
for New Point Financial Services, Inc.
A former securities partner in the firm of Nixon Peabody,
David Tamman, 45, was found guilty of 10 criminal counts in connection with his
participation in a Ponzi scheme in Los Angeles, California. The Ponzi scheme,
run by John Farahi and his company, New Point Financial Services, Inc.,
involved the loss of up to $20 million taken from defrauded investors largely
in the Persian Jewish community in Los Angeles. Tamman had served as New
Point's corporate securities counsel while at Nixon Peabody and while at his
previous firm, Liner Grode Stein Yankelevitz Sunshine Regensreif & Taylor.
A Justice Department press release announcing the
conviction stated, "As New Point's lawyer, Tamman helped John Farahi violate
the most basic investor protection law-that you tell investors the truth." The
charges against Tamman were, among other things, that he interfered with the
SEC probe by altering and backdating documents, removing documents, and lying
to the agency personnel in sworn testimony. Farahi pleaded guilty to 41
criminal counts last year. The press release further stated, "This verdict demonstrates
that there are severe consequences when an attorney crosses the line between
vigorous representation of a client and obstruction of an SEC investigation."
If convicted, Tamman faces a maximum prison sentence of
190 years, although the actual sentence is expected to be lighter than that.
Read additional articles at The Ponzi Scheme
Kathy Bazoian Phelps is the co-author of The Ponzi Book: A Legal
Resource for Unraveling Ponzi Schemes (LexisNexis 2012), along with
Hon. Steven Rhodes. The Ponzi Book, recently reviewed by Commercial Crime International, is
available for purchase at www.lexisnexis.com/ponzibook, and more information about
the book can be found at www.theponzibook.com.