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74-Year-Old Guilty of Ponzi Scheme

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Calgary, ABA 74-year-old man has been sentenced to six years in prison for his role in securities fraud. Specifically, the accused was alleged to have scammed investors across North America in a $37.5 million Ponzi scheme that a judge said, "devastated many lives." Although this case of stock investment fraud is not on the same magnitude as Bernard Madoff's Ponzi scheme, many people lost money in the securities investment fraud.

According to the National Post, Murray Harold Stark pleaded guilty to one count of fraud over $5,000. Because of his advanced age and because both the Crown (Canada's prosecution) and the defense lawyer jointly submitted a request regarding the sentence, Stark was sentenced to six years. The Ponzi scheme was reportedly run under the name HMS Financial, which accepted investments from individuals in Canada and across North America.

HMS Financial promised investors they would receive returns of between eight and 12 percent per month, compounded quarterly.

Although Stark is not believed to have been the director of the Ponzi scheme, prosecutors argued that he did not actually ensure that a vital $30 million US bond existed. That bond was used to convince investors that their investments were safe. Investors were told that their money was protected by the $30 million bond, which would guarantee against massive losses. The bond, however, did not exist and the investors' money was not protected.

Victims said they lost their life savings to the Ponzi scheme, and they have been financially devastated by the fraud. A class-action securities lawsuit has been filed by investors, who hope to recover at least some of the money they lost.

Another person charged in the scheme, HMS Financial, is also expected to plead guilty for his role. Meanwhile, a lawyer who is believed to have given the Ponzi scheme legitimacy has been disbarred and faces a pretrial hearing.

Ponzi schemes are investment scams in which money from new investors, rather than money from legitimate investments, is used to pay out the interest and principle of earlier investors. The most infamous Ponzi scheme was that of Bernard Madoff, who ran a Ponzi scheme reportedly worth around $65 billion.

Meanwhile, a man in South Florida has been charged with running a scam involving fake investments in Facebook and Groupon. The man reportedly scammed $11 million from investors based on shares in Facebook Inc. and Groupon Inc. that did not actually exist. Officials accused the man of running a two-year scheme through Praetorian Global Fund Ltd, and used investors' money to finance a luxury lifestyle, including jewelry and cars.

The accused is charged with wire fraud, securities fraud and money laundering, according to BusinessWeek (11/18/11).


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