1). 'I'm Not Madoff'
We begin overseas in South Africa, where alleged swindler Barry Tannenbaum's $1.8 billion Ponzi scheme now has some of its victims in trouble as well.
Bloomberg reports 17 suspects have been identified in the South African probe. More information needs to be gathered before charges can be brought, but investors in the alleged Ponzi scheme have also been investigated for non-compliance with tax laws.
According to the news service, Tannenbaum, 44, is thought to be in Australia.
In a comment that will surely live on in infamy, he claims he's no Bernard Madoff, referring to the convicted swindler who is now in prison in the United States serving a 150-year sentence for running a $64 billion Ponzi scheme, thought to be the world's largest.
2). Motherly Love
Shawn Merriman's $20 million Ponzi scheme is not nearly the size of Tannenbaum's transgression, but give him credit for chutzpah. This fraudster's victims include his own mother, who asked the judge during the sentencing phase of the trial to "make him pay." The judge obliged with 12 ½ years.
Interestingly, part of the severity of sentence hinged on advisor status.
U.S. District Court Judge Marcia Krieger rejected a key government claim that Merriman was not only a fund manager but an investment adviser, and thus deserved more time behind bars.
However, Krieger gave Merriman a harsher prison term than federal guidelines required, citing his betrayal of family, friends and church members, and the risk that he might reoffend.
"This gets into the confusion names and titles and the level of liability associated with each," says Kathleen McBride, editor of Wealth Manager Web and a member of the Committee for the Fiduciary Standard, a group that advocates for the Investment Advisers Act of 1940 as the industry fiduciary standard. "If nothing else, if they call themselves an investment advisor, they have to have a third-party auditor and third-party custodian. They'll have a fiduciary duty to clients that they will have to constantly prove. But if they act accordingly under the investment advisor label, they'll be better protected against legal action."
3). Kiss of Death
This strikes us as particularly appropriate: Frank Castaldi ran a $77 million Ponzi scheme for 22 years, and was sentenced to 23 years.
According to The Associated Press, Castaldi, once a respected member of the Chicago-area Italian community himself, sometimes targeted the elderly, widows and immigrants from Italy— many of whom were close friends of Castaldi who trusted him, U.S. District Judge John Darrah said.
