Matthew J. Turnipseede, 49, of Las Vegas, Nev., was indicted Thursday for defrauding 72 investors out of more than $8.5 million.
Turnipseede promised investors double-digit profits via sports wagering, the US Justice Department’s Northern District of Ohio Division alleges. He was charged with 12 counts of wire fraud and one count of mail fraud.
From March 2015 to May 2021, according to Turnipseede’s indictment, he induced victims to invest in companies he owned by claiming they placed sophisticated sports wagers according to an algorithm that generated double-digit returns. The names of these companies included Edgewize LLC, Moneyline Analytics, and Moneyline Analytics Dublin Branch.
Ponzi schemes are similarly fraudulent businesses that lead victims to believe their profits are derived from legitimate business activity. Instead, they rely solely on new investor funds.
Algorithm and Blues
Of course, none of Turnipseede’s companies ever generated double-digit profits. Instead, they were propped up by new investor money, which was also used to pay off earlier investors, seek new sources of funds, and fund personal expenses. According to the indictment, these expenses included family vacations to Disneyland and Hawaii, spa treatments, lease payments on multiple vehicles, and country club membership dues.
To perpetuate the Ponzi scheme, Turnipseede is accused of periodically emailing fraudulent financial statements to victims purporting to show substantial gains on their investments and employing an accounting firm to generate IRS forms based on fraudulent figures provided to the firm by the defendant.
The defendant used money from other victims’ contributions to cover the withdrawal whenever a victim sought to withdraw some or all of their investment, according to the indictment.
Turnipseede’s case was investigated by the Cleveland FBI and is being prosecuted by Assistant U.S. Attorneys Erica D. Barnhill and Brian McDonough.
The First Ponzi Scheme
Ponzi schemes are named after Italian con artist and businessman Charles Ponzi. In 1920, Ponzi earned an estimated $15 million in eight months by convincing lenders in the US and Canada that he could make them rich with investments in international postal reply coupons. Ponzi served three and a half years in federal prison for the scheme.
The most famous Ponzi scheme in modern times was run by Bernie Madoff, a former NASDAQ stock exchange chair who conned thousands of investors out of $20 billion in principal funds over several decades.
After his arrest in 2008, he was sentenced to 150 years in prison, where he died in 2021 at age 82.
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