From Land to Water – A Recent Ponzi Scheme

November 20, 2020by Alex Willard

On Monday, November 16th, 2020, Matthew Piercey fled an arrest attempt, leading police to Lake Shasta, a frigid lake in Northern California. Piercey was said to be in the water for a near 30 minutes with a submersible device. Once Piercey emerged from underwater, he was detained and arrested. Later he was charged with wire fraud, mail fraud, money laundering and witness tampering.  

Court documents stated, from July 2015 through August 2020, Piercey and a partner participated in soliciting under the companies Family Wealth Legacy and Zolla. They convinced investors to invest in an algorithmic trading fund, which is essentially using automated pre-programmed instructions that account for variables (time, price, volume, etc.) to execute orders.  

Overall, the investment scheme raised about $35 million. Of the $35 million raised, only $8.8 million was paid back to investors. Unfortunately, investors may not see the other $26.2 million, as it is reported there are “few, if any, liquid assets remain(ing).” 

 

We’ve all heard of one of the most famous Ponzi Schemes to ever occur, headed by Bernie Madoff, but Ponzi Scheme’s occur more frequently than many anticipate. From 2008-2018, more than 800 Ponzi schemes that raised more than $1 million were uncovered, but the actual number is likely much higher (especially if those on a smaller scale were included).  

Piercey’s recent ponzi scheme can be a lesson for us all. Here are a few “red flags” to be on the lookout for: 

  • High investment returns with a claim of “little to no risk”
  • Investments unregistered with Securities and Exchange Commission
  • Lack of paperwork
  • No access to information on the investment in writing
  • “Secretive” or complex strategies
  • Consistent returns regardless of market conditions
  • “Rolling over” returns for higher returns in the future
  • Denied requests or difficulty receiving funds from your accounts
  • Guarantees
  • Pressure to reinvest

At LeConte, we encourage clients to be fully engaged and ask questions. In addition, here are a few safeguards and ways we are transparent with our clients: 

  • Clients accounts are held in their own name. No co-mingling of assets.
  • LeConte only has Limited POA
  • Our staff does not send funds to third parties without a client authorization and signature.
  • Our staff only sends requested funds to the address listed on the account or a linked account.
  • Our clients have 24/7 access to their accounts.
  • Custodians (where clients assets are held) send email notifications when actions are performed on an account.
  • Our staff verifies who the client is using various ways before money is sent to said client.
  • Our staff will call to verify an action if we receive an email.

As Piercey’s scheme lasted more than 5 years and Madoff’s scheme lasted more than 17 years, remember this Buffet quote, “You only find out who is swimming naked when the tide goes out.” Ask questions, stay engaged and let us know if we can help! 

Alex Willard

Alex Willard

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Advisory Services offered through LeConte Wealth Management, LLC., An SEC Registered Investment Adviser.