Lydia Cladek Ponzi Scheme

Stock and Bond Fraud, including Boiler Rooms / Pump and Dump Schemes, Mutual Fund & Hedge Fund Fraud, FOREX scams, plus Churning, Private Placements, Venture and Bridge Funding, IPOs, Viaticals Fraud, HYIP and Prime Bank scams, MTNs, Historical Notes, Recovery Schemes, etc. Includes the Jim Norman Project and the Michael Dotson Project and similar HYIP scams.
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Kestrel
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Lydia Cladek Ponzi Scheme

Postby Kestrel » Sun Jul 03, 2011 9:20 pm

Here's one that seems to have been overlooked in the shadow of Bernie Madoff:

Lydia Cladek, from St. Augustine Beach, FL, was arrested last fall for running a Ponzi scheme. She faces up to 20 years in prison and a $3.5 million fine.
$100M St. Augustine Ponzi scheme alleged
ANSWERS FEW IN CLADEK CASE

The scheme apparently started out fairly legitimately. Initially, Lydia Cladek, Inc., was a subprime automobile investment company that bought consumer finance contracts from auto dealers at a discounted price, as low as 60 percent of the contract price. The company took over collection of the principal and interest on the payments for the life of the contract. Buyers were paying up to 29.5 percent on their car loans. If the customers defaulted, LCI repossessed and sold the cars.

Then Lydia Cladek got greedy. She started soliciting investors who were promised up to 18 percent return to buy up more discounted car notes. Cladek upgraded her lifestyle to a very opulent level.

She got away with it for a while, until the the economy tanked and the sources of new high interest rate car loans dried up. Sometime around 2008, perhaps a little earlier, the LCI investment opportunity became a full-blown Ponzi scheme. About the same time, LCI ceased paying attention to its accounting records.

By 2010 the whole mess became unsustainable. The creditors put LCI into an involuntary Chapter 11 Bankruptcy and the FBI got involved. The bankruptcy case is 3:10-bk-02805-PMG, Middle District of Florida, Jacksonville Division. Here is the link to the transcript from the Section 341 Meeting of Creditors. LCI has over 1300 creditor/investors. The US Trustee's comment opening the 341 meeting was, "We've never had anything of this magnitude as far as the crowd here..."

For me the biggest surprise in the whole case is that it didn't rate much attention (if any) from the national media.

I thought you'd all enjoy following this one.
"Never try to teach a pig to sing. It wastes your time and annoys the pig." - Robert Heinlein

Judge Roy Bean
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Re: Lydia Cladek Ponzi Scheme

Postby Judge Roy Bean » Mon Jul 04, 2011 12:11 am

The stupid part of this is that the lack of effective usury laws creates a fertile lagoon for loan sharks and their supporting cast.
The Honorable Judge Roy Bean
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