Florida: A economic crimes Ponzi schemer’s paradise

July 9, 2012 

When Buddy Persaud promised his investors the moon and the stars, he wasn’t kidding.

Persaud, an Orlando-based financial broker, believed the markets were affected by lunar cycles and gravitational pull.

When — surprise, surprise — the heavens failed him, Persaud paid out their promised high rates of return (up to 18 percent) by simply recruiting new investors and using their funds to pay off the old ones, the Securities and Exchange Commission alleges.

Put simply, he ran a Ponzi scheme — the non-sustainable pyramid fraud that invariably ends in ruin.

In the dirty world of Florida Ponzi schemers, Persaud is a small-timer. His enterprise, which totaled $1 million, was a comparable pittance.

From Scott Rothstein to Nevin Shapiro to even Bernie Madoff, there are so many swindlers with South Florida ties, they deserve their own wing in the Scoundrels Hall of Shame.

If pooled, the proceeds from their greed-fueled scams could run some small countries.

Rothstein, the disgraced Fort Lauderdale attorney who peddled phony structured settlements, used his $1.2 billion scheme to buy more watches than most people have paper clips, a toilet seat made of gold and an open account with a local escort service. Rothstein’s over-the-top, in-your-face lifestyle ended with his 2009 arrest. He copped a plea, and still got a 50-year prison stint.

Rothstein’s elaborate con, the largest financial fraud in South Florida history, secured his place near the top of the pyramid of the 12-most egregious Ponzi schemers with area ties — a club impressive in its audacity and its amorality.

“We seem to attract more than our fair share of crooks and bums of all varieties,” said Charles Intriago, a former federal prosecutor and Miami-based financial crimes expert. “This seems to be a magnet for these folks.”

Said Andrew Levi, a fellow ex-prosecutor: “Is this the Ponzi capital of the nation? I don’t know. But there’s no question that it’s one of the worst.

“It’s definitely, unfortunately, a place where either Ponzi schemes have originated or where residents have been the target,” added Levi, who now heads the Miami office of Nardello and Co., the international investigative firm.

RANKED RIGHT BEHIND THE BIG APPLE

Miami ranked second behind just New York in federal prosecutions of securities and investment fraud last year, said Wifredo Ferrer, the U.S. Attorney for the Southern District of Florida — and was first overall in financial institution fraud.

And the problem seems to be only getting worse. Nationally, the number of pending securities and commodities fraud cases has increased in each of the past four years, with 1,846 in 2011. While not every securities-based rip-off is a Ponzi scheme — named after the most famous pyramid fraudster, Charles Ponzi — many are. Since 2008, the SEC’s Miami regional office has brought civil charges in 13 cases where Ponzi scheme allegations were the primary alleged fraudulent activity.

In response, the SEC, U.S. attorney’s office, IRS and other state and federal agencies have pooled their resources to more aggressively take on Ponzi schemers, who Ferrer says target the middle class as well as the rich.

“We’re dealing with real people who have saved their hard-earned money,” Ferrer said. “To have it all swept away at the end is outrageous and unacceptable.”

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