OMAHA (DTN) -- A federal grand jury has indicted two people -- an Illinois woman and a Georgia man -- for allegedly running a Ponzi scheme that raised an estimated $650 million tied to false claims involving fake cattle trade and plans to use investors' money for a Colorado-based marijuana business.
The U.S. Justice Department stated Wednesday in a news release the Ponzi scheme ran from late 2017 until early 2019 and involved investors from around the country.
Reva Joyce Stachniw, 69, of Galesburg, Illinois, and Ron Throgmartin, 57, of Buford, Georgia, were charged with multiple federal counts of wire fraud and conspiracy.
The pair were tied to a third co-conspirator, Mark Ray of Denver, Colorado, who was previously charged in federal court in February 2020 for his role in the investor scam. All three had been previously part of a civil complaint filed against them by the Securities and Exchange Commission.
There were never any actual cattle involved, but Stachniw, Throgmartin and Ray repeatedly maintained they were trading cattle as part of their scheme. Ray had set up MR Cattle Production Services LLC in Colorado to help solicit investors. He also had a marijuana distribution company in Colorado, Universal Herbs LLC, that was heavily in debt before it collapsed.
Ray is formerly from Abingdon, Illinois. Back in 2005, he had been barred from selling securities in Illinois after selling unregistered securities for a cattle company. The initial civil complaint filed against him in 2019 by the Securities and Exchange Commission alleged he had been running Ponzi-scheme investments tied to a cattle trading operation and the marijuana business going back as far as 2014.
The SEC has taken receivership over any assets tied to Ray and Stachniw and their various business entities. The court-appointed receiver, in a report filed in federal court this week, cites that Ray's estate has 98 claims against it totaling $64.1 million, which includes claims from investors in the cattle scheme and banks that were involved. The receivership report also noted Stachniw and her husband had settled with the court for $7 million last October.
Stachniw, Throgmartin, Ray and others, according to the indictment, solicited money from investors with claims that their funds were backed by "short-term investments in cattle." They also solicited money fraudulently for the marijuana business, Universal Herbs. Victim-investors provided money to the co-conspirators based on false promises that the investment money would be used for legitimate businesses in either cattle or marijuana.
Ray often would claim to investors he was buying a specific number of cattle from a ranch that would be going to a feedyard for finishing. Several ranches and feedyards contacted by SEC investigators said they did not trade cattle with Ray.
The victim-investors were promised short-term rates of returns ranging from 10% to 20% over periods as short as several weeks. Instead, Ray, Stachniw and Throgmartin or others were using the money to repay other investors in the Ponzi scheme. At one point, the scam had as much as $140 million a month moving through various bank accounts.
Stachniw would often send text messages, emails or call Throgmartin and Ray about how much money they needed to raise from victim-investors to avoid overdrawing at different bank accounts. They also timed deposits from investors to take advantage of clearing time at a bank or other institutions -- known as check kiting -- which effectively defrauded the banks as well.
The SEC alleged Stachniw, a retired nurse, used her ownership of a couple business checking accounts to allow Ray to wire money. Stachniw also signed promissory notes for investors and made wire transfers.
In 2018, the indictment states, one bank raised concerns over the funds flowing through Stachniw's account. To keep the account open, Throgmartin falsely claimed the transactions were proceeds from cattle trades involving co-conspirators and claimed they were "well-established cattle partners." Throgmartin also prepared and sent false and fraudulent invoices claiming to document cattle transactions that never occurred.
By early 2019, the indictment states, Stachniw, Throgmartin, Ray and others who are unnamed had collectively raised approximately $650 million from victim-investors. Yet, the Ponzi scheme ran out of money and began to collapse. Investors lost tens of millions of dollars in the process. The indictment does not specify how many investors lost money.
Over that stretch from 2017 to 2019, Stachniw transferred approximately $9 million to her personal accounts, and Throgmartin transferred about $3 million to his accounts.
Stachniw and Throgmartin are each charged with seven federal counts, including one count of conspiracy to commit wire fraud, five separate counts of wire fraud and aiding and abetting, and one count of conspiracy to engage in monetary transactions for unlawful activity. Each count has a maximum penalty that ranges from 10 to 30 years and potential fines ranging from $250,000 to $1 million for each count.
Chris Clayton can be reached at Chris.Clayton@dtn.com
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