Part of the scheme operated through companies that listed registrations in Aruba, the SEC said.

Named defendants were Justin Solomon of Deerfield Beach, Fla., Seisma Oil Research LLC of Boca Raton, Fla., Seisma Energy Research AVV and Permian Asset Management AVV of Aruba.

Authorities said said regulators in the United States, Canada, Germany and the United Kingdom worked cooperatively in the investigation.

Solomon and the companies have consented to a preliminary injunction and to repatriate assets , the SEC said.

The case was filed in Texas, and the scheme affected more than 400 “overseas” investors, the SEC said.

High-pressure sales tactics were used to recruit clients, and the scheme raked in $25 million, the SEC said, adding that only $9.5 million of the sum actually went toward acquiring interests in oil and gas wells.

“Seisma misrepresented or omitted material facts about the profitability and prospects of the oil and gas opportunities,” the SEC said.

Assisting in the probe were the Nova Scotia Securities Commission, the Ontario Securities Commission, the Financial Services Authority of the United Kingdom, the London Police Department, the Federal Financial Supervisory Authority of Germany and the Florida Office of Financial Regulation, Division of Securities, the SEC said.

Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, is implementing a “hardship program.”

The announcement itself is almost painful to read — even though the program is designed to accelerate relief — because it demonstrates the wanton destruction Madoff caused.

Here are the hardship-program standards (italics added):

Based on the Hardship Application that you submit, the Trustee will assess whether you qualify for the Hardship Program based on the following indicators of hardship:

a.   Inability to pay for necessary living expenses, such as housing, food, utilities and transportation.

b.   Inability to pay for necessary medical expenses.

c.   Necessity to return to work, at the age of 65 or older, after having previously retired from former employment (special consideration will be given to individuals that can no longer return to their former work).

d.   Declaring personal bankruptcy.

e.   Inability to pay for the care of dependents.

f.   Otherwise suffering from extreme financial hardship as demonstrated by other circumstances not addressed by the foregoing.

Picard said the program would try to speed up “Securities Investor Protection Corporation (SIPC) protection” for individual victims of Bernard L. Madoff Investment Securities (BLMIS).

“The purpose of the Hardship Program is to provide a mechanism by which customers of BLMIS that are suffering hardship can accelerate the determination of their claims and the payment by the Trustee of the SIPC protection afforded to such customers. The SIPC protection is an amount not to exceed $500,000.00,” Picard’s Trustee website said.

“The Hardship Program is a supplement to and not a replacement of or alternative to the existing claims procedure. All customers seeking to enter the Hardship Program must have previously submitted a claim or must submit a claim concurrently with submission of the Hardship Application. Please note that the claims bar date is July 2, 2009.

“The Hardship Program is only available to individual account holders, and not to corporations, partnerships and other business entities that are account holders of BLMIS or indirect investors through feeder funds or other investment vehicles.”

Read about the Madoff hardship program on Picard’s site.

Livermore police began receiving troubling reports on Maynard Weldon Moreland April 7.

Moreland, 49, a Certified Public Accountant, has been charged by the Alameda County District Attorney’s Office with seven counts of felony investment fraud and fiduciary elder abuse.

At least eight senior citizens “have suffered cash losses totaling $734,000,” Livermore police said.

As part of the investigation, police served three search warrants last month.

“Financial records obtained by search warrants show that the defendant promised between 8% and 10% interest on client investments he received,” police said. “[H]owever, in the majority of cases he deposited funds into investments accounts under his name only.”

Police alleged that Moreland “personally self enriched from the investment funds, funding a personal lifestyle that exceeded $30,000 per month. Little or no money remains available for victim restitution because of the Ponzi scheme nature of the crimes.”

Moreland traded on trust, police said.

“Many of Moreland’s client’s were long time acquaintances and entrusted their life investments and savings to him,” police said.

Investigators said “numerous” other victims may exist “due to the deceptive practices of Maynard Weldon Moreland.”

Any person believing they are a victim of Moreland’s Ponzi scheme and alleged fraud or who has information regarding Moreland’s activities is asked to call Lt. Matt Sarsfield at 925-371-4730.

Hsu, 57, has pleaded guilty to 10 counts of wire fraud and mail fraud for running a Ponzi scheme that fleeced investors out of at least $20 million.

The scheme operated between 1997 and 2007. Hsu faces up to 200 years in prison, and also is facing trial for campaign-finance fraud.

Tidbit: Ezra Merkin, former head of GMAC and the operator of Gabriel Capital Corp., has been sued for more than $500 million.

The lawsuit was filed by Irving Picard, the bankruptcy trustee in the Bernard Madoff case, and alleges that Merkin gorged on fees earned by directing business to Madoff but should have known Madoff was engaged in fraud.

AFM will release details about a Ponzi scheme involving 70 million euros ($92.7 million) in the “coming days,” the newspaper reported.

Tidbit: Courthouse News Service is reporting on a lawsuit in which East West Bancorp allegedly aided AOB Commerce in a $45 million Ponzi scheme involving promissory notes.

The SEC sued AOB in 2007.

Eric Riley Merkle, 55, of Williamston, Mich., pleaded guilty to securities fraud, mail fraud and conspiracy, said U.S. Attorney Donald A. Davis of the Western District of Michigan.

“Merkle admitted at his change of plea hearing that he created a company known as Platinum Business Industries (PBI), that operated as a large-scale Ponzi scheme,” prosecutors said.

“Merkle solicited investors by telling them PBI would use their money to fund oil and gas exploration in Oklahoma, and promised returns as high as 6% per month, or 300% over three to five years,” prosecutors said.

“Instead, Merkle put the investors’ money in high-risk schemes unrelated to oil and gas, both in the United States and overseas, and lost it,” prosecutors said.

When PBI could not pay promised returns, Merkle used money raised from new investors to pay “earnings” to earlier investors, creating the illusion of a profitable company, prosecutors said.

He also admitted that, when soliciting new investors, he did not tell them their funds would be sent overseas, or used to pay off previous investors, prosecutors said.

Merkle deliberately concealed both PBI’s insolvency and his actual plans for investor funds, because he knew clients would not invest if they were told the truth, prosecutors said.

“By Merkle’s own admission, losses attributable to the PBI scheme approached or exceeded $5 million.

The FBI and the U.S. Postal Inspection Service conducted the Merkle probe.

Investigators said the crimes occurred between March 1, 2004, and April 30, 2006. Charitable and community groups were among the victims.

Reiger, 38, and Braun, 35, “were co-owners of CityPay Payroll Services (CityPay), which offered the service of fully processing company payrolls, including issuing checks to employees, forwarding payment of all payroll taxes to the appropriate authorities, and filing all related tax forms with the appropriate authorities, among other services,” investigators said.

The company “aggressively marketed its services to prospective clients, frequently at no cost, or at extremely low rates, and quickly built a list of hundreds of client accounts, investigators said.

Reiger was president of the company. He was arrested yesterday. Braun was chief operating officer, and has not been apprehended, investigators said.

“Client companies would forward their payroll information to CityPay, and CityPay, in turn, would calculate the payroll tax withholdings for each employee and issue their pay checks,” investigators said.  “Additionally, CityPay would debit funds from its clients’ bank account and credit those funds to a CityPay bank account.  CityPay would represent to the client that the debited funds would be forwarded to the federal and state tax authorities when the payroll taxes came due, which usually was a matter of days or weeks, depending on the size of the tax liability and the tax authority to which the liability was owed.

“In connection with these payroll taxes, CityPay also was supposed to file the required tax forms for its clients, reporting the amount of tax withholdings for each pay period,” investigators continued.  “Although CityPay debited its clients’ bank accounts for the sole purpose of forwarding the debited funds to the appropriate tax authorities, the investigation revealed that the defendants regularly failed to do so.  Instead, the defendants stole those funds and misused them for their own purposes, chiefly to pay the operating expenses of CityPay and the personal expenses of defendants Reiger and Braun.

“Reiger spent $386,661.03 on personal expenses and contributed $134,571 to the business,” investigators said. “Braun spent $38,915 on personal expenses and did not contribute any money to the business.”

Reiger and Braun “concealed and delayed the discovery of their thefts by falsifying entries in the CityPay computer system that was used to keep track of clients’ payrolls and associated tax liabilities,” investigators said. “In addition, the defendants made misrepresentations to the IRS and state tax authorities in response to notices indicating their clients had failed to pay the proper payroll taxes and gave false explanations and excuses to clients who called after receiving delinquent tax notices.”

A Ponzi scheme kicked in as the scheme grew, authorities said.

“[T]he defendants began systematically to apply the payroll tax funds debited from some CityPay clients to pay off the growing tax liabilities (including interest and penalties) of other clients, whose funds the defendants had already misappropriated,” investigators said.

“Ultimately, the defendants stole funds that had been entrusted to them from hundreds of companies, small businesses, and not-for-profit organizations located throughout the United States,” investigators continued.

“When CityPay’s scheme collapsed around April 2006, the defendants had stolen from and accrued a total tax liability for their clients of $1,681,904.31. Those clients were left to pay the tax withholdings to the IRS and state tax authorities a second time, along with interest and penalties,” investigators said.

Each defendant was indicted on one count of Grand Larceny in the Second Degree, a class C felony, 19 counts of Grand Larceny in the Third Degree, a class D felony, and two counts of Scheme to Defraud in the First Degree, a class E felony.  A class C felony is punishable by up to 5 to 15 years, a class D felony is punishable by up to 2⅓ to 7 years, and a class E felony is punishable by up to 1⅓ to 4 years, all in prison.

Ruderman made at least one Ponzi payment, and falsely told investors that Lowell Milken, chairman of the Milken Family Foundation and Michael Milken’s younger brother, and Larry Ellison, chief executive officer of Oracle Corp., invested with him.

Authorities said Ruderman “raised at least $38 million” from about 20 investors since at least 2002 through his two hedge funds, Ruderman Capital Partners and Ruderman Capital Partners A.

“Ruderman falsely told investors that the hedge funds had earned positive returns from 15% to 60% per year and had over $800 million in assets,” the SEC said.

“In reality,” the SEC said, “the hedge funds lost money and had less than $650,000 in assets. “Ruderman made at least one Ponzi-like payment, using new investor money to pay returns to an earlier investor.”

U.S. District Judge Valerie Baker Fairbank of the Central District of California granted an SEC request for emergency relief. Ruderman, his company Ruderman Capital Management (RCM),  and the hedge funds have been enjoined from future violations of the antifraud provisions.

The order froze assets and prohibited the destruction of documents.

Read the SEC Ruderman complaint

Prosecutors said investors were fleeced out of more than $70 million after being told a $50,000 investment would result in their mortgages being paid off.

Read our earlier story. Read about Nelson’s guilty plea in the Washington Examiner.

Tidbit: The British Office of Fair Trading (OFT) has arrested three women as part of an ongoing probe of a pyramid scheme. The agency did not name the women.

“The OFT continued its criminal investigation into a suspected unlawful pyramid scheme operating in the South West of England and South Wales by carrying out further raids in the Bristol area today,” OFT said.

“OFT officers executed entry warrants at home addresses in Bristol and East Harptree accompanied by police, who arrested three women alleged to be involved in the establishment, operation and promotion of the suspected pyramid scheme. The OFT also served notices at a number of other addresses requiring individuals and businesses to produce documents relevant to the investigation.

“The OFT is working closely with Avon and Somerset Police and South West England Scambusters and these raids are connected to arrests carried out in January and earlier this month,” OFT said.

“The scheme appears to be aimed at women, with each participant promising to enlist two more members. The OFT estimates that up to £18 million [$27 million/U.S.] may have passed through the scheme since May 2008 with thousands of consumers paying up to £3000 each to join.”

Anyone with information regarding any suspected pyramid scheme is asked to contact Consumer Direct on 08454 04 05 06 or at the Consumer Direct website.

“The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) prohibits the establishment, operation or promotion of any scheme where money is made primarily from recruiting other people rather than from the sale of goods and services,” OFT said.

“Breach of the prohibition is an offence punishable by up to two years imprisonment and/or an unlimited fine,” OFT said.

Tidbit: Bernard Madoff, author of the world’s largest Ponzi scheme, turns 71 today. He is a among a number of senior citizens implicated in large Ponzi scheme.

A federal judge has issued an emergency order freezing the assets of Pang and the companies — Private Equity Management Group Inc. and Private Equity Management Group LLC (the PEM Group).

The discussion centered on Pang includes elements of straightforward financial fraud and Ponzi fraud. He was ordered to repatriate funds sent overseas and to surrender his passports.

Pang and his Irvine, Calif.-based firms “misled investors by falsely claiming that their returns would come from proceeds made on the timeshare or insurance policies investments,” the SEC said. “Instead, some of the purported returns were paid out of funds raised from newer investors.”

Forgery also played a role in the scheme, the SEC said.

“In at least one instance, the PEM Group presented investors with a forged $108 million insurance policy to support a false claim that a particular investment was entirely covered by insurance,” the SEC said.

Pang also lied about his background, the SEC said.

“Pang and the PEM Group attracted investors by falsely representing Pang as a former senior vice president and high-tech merger adviser from Morgan Stanley & Co. with an MBA from the University of California at Irvine,” the SEC said. “Pang never worked at Morgan Stanley nor did he attend or obtain any degrees from UC Irvine.”

It was a bid to create “an aura of authenticity,” said Robert Khuzami, director of the SEC’s Division of Enforcement.

“We allege that Pang lured investors with false claims and even bogus documents to dupe them into believing their principal and interest were guaranteed and insured,” said Khuzami. “Swift and decisive enforcement action is critical to rooting out unscrupulous promoters who will stop at nothing to create an aura of authenticity when making unreal assurances to investors.”

Investors need to do their homework, stressed Rosalind R. Tyson, director of the SEC’s Los Angeles Regional Office.

“Pang’s alleged use of phony credentials and false insurance coverage to guarantee his investments underscores how critical it is for investors to exercise due diligence before entrusting their savings to promoters,” Tyson said.

U.S. District Judge Philip S. Gutierrez of the Central District of California granted the SEC’s request for emergency relief for investors. Robert P. Mosier has been appointed receiver over the PEM Group.

Despite the fact investors directed hundreds of millions of dollars at Pang, “[n]either Pang nor his entities have ever been registered with the SEC,” the agency said.

Pang and the PEM Group “have been engaged in the fraudulent offering of securities since at least 2003,” the SEC said.

“Pang and the PEM Group told investors that they would generate enough profit to pay returns on their investments through purchasing life insurance policies at a discount before maturity and then collecting the proceeds of the policy upon the death of the insured,” the SEC said. “In fact, the life insurance policies did not generate sufficient profit to cover the cost of the premiums to maintain the policies and pay the purported returns to investors. Pang instead directed PEM Group to use funds raised from subsequent investors, who were supposed to be investing in timeshares, to pay the purported returns of earlier investors in the ill-fated life insurance investment.”

Read the SEC’s complaint against Danny Pang.