What's up guys and welcome back to wall street millennial on this channel, we cover everything related to stocks and investing, unfortunately, that sometimes means financial crimes and corporate mismanagement at its worst. These crimes can affect the lives of ordinary citizens to the tunes of hundreds of millions of dollars. Ponzi schemes market manipulation outright stealing from customers. We've seen all these things happen in previous videos.

On this channel, in july of 2021, the sec shut down a ponzi scheme operated by a mother and son that purports to use quantum computing technology and supercomputers to beat the market. Here's a picture of what they told investors was a miniature version of their super computers that they use for trading. Obviously, it's just a decorative pillar in a shopping mall. They promised annualized returns as high as 30 and also claimed that their investments had similar risk profiles to treasury bonds.

We made a video on it a couple months ago, but today we're taking a look at one of the most recent such cases. A blatant ponzi scheme whose perpetrators targeted their own friends and family, especially elderly retirees. This game raised almost 18 million dollars from as many as 200 different investors and misappropriated the funds to things like horse racing and limo services. In this video we'll go over how these schemers ran this operation and what they did with the money.

This ponzi scheme involves a couple from shakopee minnesota, jason bullard and angela romero bullard. They co-owned bullet enterprises, llc dlj, real estate, llc and empire investments llc. In addition, they also own empire racing, stables, llc and ti 13 llc through bullard enterprises. It starts soliciting investors around 2008.

They established two funds, the flagship fund and the platinum fund, which they told prospective investors. They would invest in the couple told the investors that these funds were quote pay for performance unquote. In other words, only if the funds made a positive return would the couple be paid any fees. Additionally, if the investors want to close their accounts, they could only do so over an extended period lasting over a year, whereby only five percent of the account could be liquidated.

Each month they touted expected fund returns of 10 to 12 percent the offerings of their funds. On the surface seemed legitimate, they sent monthly or quarterly account statements to their clients. Advertise expected returns modestly above market averages and provide legitimate business accounts for investors to deposit their money into. However, as soon as investor money was received, the couple started misappropriating it at the beginning of 2019.

The company account only had about 377 thousand dollars in it from 2019 through april of 2021. The couple received more than two and a half million dollars of investor money, but instead of transferring the majority of these investor funds to the company's brokerage account at td ameritrade, they left about 2.3 million dollars in the bank account they used more than 2 million of It to repay previous investors in a ponzi scheme style arrangement, as well as for their own personal uses. These personal uses included funding their other business ventures, making car loan payments, paying off credit card bills and general living expenses. The couple were able to accumulate so much investor capital in part because of the lies that they made in their investor account statements over the course of the years from 2008.

Through 2021, they claimed in the account statements that they had made a profit in every single account in every single period, except for a few in the summer of 2020.. In those statements, they told investors that their accounts were flat because they pulled out the market temporarily. Due to the pandemic, the vast majority of these account statements were, in fact false. The true returns of their managed investments were substantially negative.

For example, records show that in 2018, the fund lost 49 of its value after the couple sold assets worth less than 300 thousand dollars, which they had bought for almost 600 000 dollars in 2019, they lost even more money and had a greater negative return. A 66 loss totaling 744 000. In 2020, they managed to eke out a measly one thousand dollar positive return. They told their clients that they were using investor money to profitably trade, foreign exchange products.

However, this was also an outright lie. Records show that the couple had not traded any foreign currency for at least the past six years, the difference between what they claimed on their account statements that they sent to investors and the reality of the fund performance was sometimes laughably extreme. For example, in october of 2020, they sent an account statement to one of their investors, showing that the investor had a balance of 1.4 million dollars in his account, however, the entire portfolio of the fund, including all investors, was only about thirty thousand dollars. In fact, the total amount of money in all the couples accounts, including their business and personal bank, accounts with only about two hundred ten thousand dollars.

As time went on and the ponzi scheme entered into the later stages. The couple started misappropriating all the money that investors sent them throughout most of 2019 and 2020, despite receiving more than a million dollars of new investor money. They deposited no new funds into the company trading account at td ameritrade at the beginning of 2021. The company trading account only had 275 dollars in total.

The couple instead used much of the investor money to repay previous investors in the form of their account dividend payments. Although they told investors that the payments were from money earned by their profitable trading strategies, they were, in fact from capital contributions of other investors. They did the same thing when investors requested the return of their invested money by 2020, when the ponzi scheme started to run out of money. This arrangement became more tenuous, for example, when one investor requested to withdraw 100 000 of his account balance in june of 2020.

The company's total funds across all bank and trading accounts was less than half of that amount, including the couple's personal bank accounts. They only had about 106 thousand dollars in order to build their request to withdraw the funds. The couple used money from the small business association's paycheck protection program. They also use some paycheck protection program, money to fund their horse racing efforts, their frustration at having to come up with large amounts of withdrawal money to return to their investors also caused them to lie about their regulatory situation.

They told one investor quote, believe it or not. This is a regulated business unquote and that the withdrawal request had to be approved by the regulators. They actually were not registered with any regulator and were just using this as a delay tactic to buy time. Jason bullard.

One of the couple was associated with a broker in the early 2000s and had some securities licenses. However, when he tried to register with the national futures association in 2010 to become an associated forex person, he never finished the registration process, angela romero bullard. The other person in the couple had no securities licenses whatsoever. Their firm bullard enterprises llc did start the registration process with the national futures associations as a commodity pool operator and forex firm in 2010, but failed to complete it.

The company actually failed to file its corporate renewal with the state in 2019 and it thus technically is considered inactive. Despite the ongoing ponzi scheme in august of 2021, the sec formally charged a couple with violating federal securities laws. The perpetrators are now under restraining order and asset freeze, and the ponzi scheme is effectively halted. In total, 17.6 million dollars were raised from investors during this game's 14-year history.

The majority of that money is now nowhere to be seen and the victims will be unlikely to recover any of their invested money. The perpetrators use much of the money to fund their own separate business ventures. For example, they ran a horse racing operation under empire racing, stables, llc and three other businesses which their investors had no stake in according to the sec, many of the victims of the scheme were friends and family of the bullards. This ponzi scheme shows that financial fraud in the post-bernie madoff era is still common and anyone can fall victim to them most of the time whenever someone solicits investors, promising unrealistic returns or abnormally low risk, that's a sure, sign of a fraud, but in this case the Perpetrators did not promise either of those things.

They only said that investors could expect around 10 to 12 percent returns, which is a believable return for some investing and trading strategies. If you're thinking about investing your money with someone, even if you know them as friends or family, it is always a good idea to check on their registration status with the sec and finra. The sec has easy to use databases to search for investment. Advisor firms currently registered with the commission before giving anyone else, your money be very sure to check on their background financial fraud targeting normal people is as prevalent today as it ever was.

Alright guys that wraps it up for this video. If you enjoyed this content, make sure to hit the like button and subscribe for future videos like this, one also leave a comment saying how you would have been able to tell these schemers were actually frauds in the meantime. Thank you so much for watching and we'll see you in the next video wall street millennial, signing out.