Dennis Edmonds was a stockbroker in North Carolina; Ellwood Jones, a wealth manager in California; and the firm of Foster & Dunhill peddled so-called “business protection plans” in Florida.
They all had one nefarious thing in common, according to Ohio-based investor-rights attorney John Chapman -- they all put their clients into Nikolai Battoo’s “Private International Wealth Management (PIWM)” portfolios, with the bogus claim that Battoo was a financial genius of epic proportions.
Two Peas in a Pod – PIWM’s Nikolai Battoo and Madoff
The PIWM turned out to be a massive Ponzi scheme connected to the infamous Bernard Madoff. Investors lost $20 billion in Madoff’s house-of-cards scam.
Battoo’s financial empire was an “amorphous syndicate of funds, entities, and affiliates,” according to the U.S. Securities and Exchange Commission (SEC). Like Madoff, Battoo made himself out to be a highly successful asset manager with a track record unmarred by the global financial crisis.
Investors Who Recovered PIWM Funds “Well Satisfied” says Advocate
Last week, John S. Chapman, an Ohio-based investor fraud recovery attorney with a national practice, announced that he had reached multi-million dollar settlements with two large securities broker-dealers who were “asleep at the switch” during the PIWM debacle.
Chapman, known for recovering money in complex frauds, can’t reveal the details because the settlements are confidential, other than to say his clients, 13 PIWM victim residents of California and North Carolina, are “well satisfied” with the resolution of their claims.
The financial settlements come three years after regulators shut down the fraudulent Private International Wealth Management scheme masterminded by Battoo, who once claimed to manage $1.5 billion on behalf of investors throughout the world, $100 million of which came from unwitting U.S. investors.
“Battoo and his cohorts cooked the books at PIWM, inflating the value of the assets under management and concealing catastrophic losses,” says John Chapman.
PIWM’s Nikolai Battoo Living Large at-Large
Nikolai Battoo used the money he stole from PIWM investors to live a grand lifestyle. For example, he used $11 million of investor funds to renovate and furnish a 40,000 square-foot mansion in Switzerland, where he now lives beyond the reach of U.S. law. Battoo paid more than $3 million to obtain immigration status as a Swiss resident.
Since Battoo lives in Switzerland, investor’s attorney Chapman had to go after the personal financial services firms that were in cahoots with him.
How a Ponzi Sceme Works
A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors, according to the SEC. To survive, Ponzi schemes require an unending flow of money from new investors.
They collapse when it becomes difficult to recruit new investors or when a large number of investors decide to cash out as when the economy tanks.
First Money Back to PIWM Investors
“It’s a great day for PIWM victims,” says Chapman of the settlements. “As best we can tell, this is the first money that’s come back into the pockets of any of Battoo’s victims from any source, and it’s long overdue. It’s not fair and it’s not right that investors should pay the price when Wall Street firms doze off on the job.”