Losses could grow in alleged Ponzi scheme
More investors likely to come forward, lawyer says
By Ron Menchaca
PHOTO PROVIDED
Michael Derrick Peninger is accused of operating a Ponzi scheme that bilked investors out of millions of dollars.
Additional story
Former broker is sued; Regulators allege man was operator of Ponzi scheme based in Mount Pleasant, published 10/01/08
An alleged Ponzi scheme in Mount Pleasant that federal authorities say bilked at least 20 investors out of more than $1 million might involve more people and much more money, lawsuits indicate and an attorney involved in the case says.
The attorney, who represents an elderly couple who lost $1.5 million in investments with Michael Derrick Peninger and his CSA Trading Group Inc., told The Post and Courier that he thinks more investors who lost money are likely to come forward before the dust settles.
The Commodity Futures Trading Commission alleges in a suit filed Monday that Peninger hooked investors with promises of handsome returns and a risk-proof system for buying and selling commodity futures.
"Peninger described himself as a successful trader" and "characterized his trading results in glowing terms," the suit says of the alleged scheme that operated between October 2002 and January 2007.
The case has drawn comparisons to the recent high-profile investment fraud case of former star economist Al Parish, who was convicted of running a Ponzi scheme that defrauded hundreds of investors out of an estimated $66 million.
Attorney Andrew Gowdown, who represents the couple suing Peninger for losses, said that while the two cases share a common financial structure, Peninger's case has yet to turn up the lavish spending that surfaced in the Parish scandal.
Authorities attempted to recoup investors' losses in the Parish case by selling off high-end properties, luxury vehicles and other valuables.
Other than a large house that has since been foreclosed on, there's little to show for the millions of dollars Peninger fraudulently amassed through his trading group and other businesses, Gowdown said.
"The only justice my clients are going to get is when Mr. Peninger goes to jail."
Officials with the U.S. Attorney's Office declined to say whether a criminal investigation is under way. Attorneys representing some of the victims say they or their clients have been contacted by federal investigators, including the FBI.
Peninger could not be reached for comment. A Mount Pleasant office building he once listed as a business address appears to be vacant.
Attorney Brandt Shelbourne said he no longer represents Peninger in any of the pending civil cases. He and his client parted ways over failure to pay attorney's fees, he said.
Gowdown said he thinks losses in the Peninger case could reach upwards of $4 million once all of the investors are identified.
Peninger's company promised to pool investors' money, yet the company opened just one trading account with $10,000, the suit says. Most of that money was lost in trading within a five-month period in 2005 and 2006, according to the suit
Among the other lawsuits and judgments filed to date against Peninger, his partners and companies include:
--A May 2008 judgment against Peninger, his partners and companies for $1.5 million. The loss represents the retirement savings of a couple in Mount Pleasant.
--A May 2008 judgment for $1.2 million in damages.
--A September 2008 judgment for about $840,000.
--An April 2007 judgment for $725,000 against Daniel Island Builders, another of Peninger's companies.
--A lawsuit filed by a husband and wife alleging losses of more than $600,000 that was supposed to be invested in a natural gas venture in Kansas.
--A lawsuit filed in April 2007 by two men alleging that they lost a combined $275,000 to Peninger and his partners.
--A 2008 judgment order in favor of a woman who claimed losses of $196,000.
Attorney John F. Martin said his clients met Peninger through social circles and soon bought into his well-honed investment pitches.
Peninger "had credentials from the brokerage industry and was a good salesman," Martin said.
Peninger was registered as a futures commission merchant from 1989 to 1993 while at Dean Witter Reynolds Inc., and later was a registered broker at a firm called Palmetto State Commodities.
He had no such credentials in his role at CSA Trading, according the federal lawsuit.
Martin said his clients made several loans to Peninger and were promised repayment with interest. The company "made some of the payments, but they were just using other people's money."
Reach Ron Menchaca at rmenchaca@postandcourier.com or 937-5724.
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Comments
billyjoejimbob (anonymous) says...
UMMM...when u start loaning money to the broker who handles your investments....it's time to pull your head out and think a bit. Sorry you got greedy and got taken...but you know in your gut something was fishy about this.
October 4, 2008 at 4:32 a.m. ( permalink | suggest removal )
Neponset (anonymous) says...
I don't understand why this crook has not been arrested and put in jail pending trial - surely there is something he can be charged with. Mail fraud seems to be a popular charge.
October 4, 2008 at 5:08 a.m. ( permalink | suggest removal )
hibben13 (anonymous) says...
There is more to this story...arrogance and greed only for starters.. This person lied and stole...converted $$ for personal use by him and his family...and they continue to boldly prance around this community as if they are above the law...hope they reap what they have sown.
October 4, 2008 at 7:51 a.m. ( permalink | suggest removal )
Riptide (anonymous) says...
I'm always curious with white collar crime. A smart criminal would have a plan with an exit strategy in the event the plan didn't go the way it was suppose to. I can see the guys down in the hood executing a neighborhood robbery and getting caught on the video cameras. Homey is not very smart but the white collar criminal, he's not stupid yet he gets caught. I wonder if he factor's in a plan to deal with this before he starts down this road?
Am I watching too many movies?
October 4, 2008 at 9:04 a.m. ( permalink | suggest removal )
ysillyme (anonymous) says...
Didn't anyone learn anything from Al Parish and his b.s.? Maybe the lowcountry is fertile ground for those looking for Amway style success, or Fuller Brush door to door.
October 4, 2008 at 10 a.m. ( permalink | suggest removal )
ChrisPia (anonymous) says...
I have absolutely no knowledge, none, of the circumstances of his arrest or his guilt or innocence other than what's been in the newspapers or on television," Rose said. "This is a political ploy on Scott's part to associate me with something I'm not associated with. His campaign is based on sympathy and untruths, while mine is based on substance and truth."
Scott was arrested April 19 and charged with driving under the influence. He is scheduled to stand trial before a magistrate's jury in Summerville this morning, and Rose's subpoena came from Scott's attorney, Reese Joye.
Scott and Joye did not return messages left Tuesday. Scott has said he is innocent and that the charge is politically motivated.
Rose's attorney, Brandt Shelbourne, said he filed the motion to quash the subpoena and will be prepared to argue it before
Post and Courier 5/28/2008 by Robert Behre "Mike Rose subpoened for Scott Trial..
EXCEL>>>>>>>>>WORLD VENTURES>>> PYRAMIDS ?????????
October 4, 2008 at 10:18 a.m. ( permalink | suggest removal )
Riptide (anonymous) says...
ysillyyme...
This kind of thing happens everywhere in this country not just the low country. There are people who are completely immoral and unable to do the right thing in life. It doesn't matter if he or she lives in the hood, inside the beltway, or on wall street. If they view their fellow man as stupid and to be taken advantage of, then this kind of behavior and outcome is inevitable. Most people will do the right thing in life but don't take people at face value especially when large amounts of money is involved. Investment should be well diversify to cover all bases and keep debt to a manageable level. I like Ronald Reagan's way of looking at life: Trust but verify.
October 4, 2008 at 10:23 a.m. ( permalink | suggest removal )
ChrisPia (anonymous) says...
November 06, 2007
Who is going to be town attorney?
Summerville Town Council meets tomorrow night in executive session to discuss the town attorney's position. Town staff says they've recieved several applications for the position, but Talk of the Town's question is honestly who would want that headache for $35,000 a year?
Sources tell Talk of the Town former State Sen. Mike Rose will soon be announcing his bid for State Senate, taking him out of the running for the job.
Another name being floated around inner circles is Summerville attorney Brandt Shelbourne. Brandt's parents are Linda and Peter Shelbourne of Linwood, who have been extremely active in growth issues with Town Council's new power quartet. So involved, Talk of the Town has learned, the group with an aim towards placing stringent restrictions on growth held interviews with each House District 94 candidate at Linwood.
A name being floated around that could draw acclaim from both sides of the aisle on Town Council is former 1st Circuit Solicitor Walter Bailey. Bailey used to be the town attorney, so he has experience in municipal law. Talk of the Town has talked to sources that say Bailey would not afraid to voice his opinion on legal matters to Town Council in public, something Kelly Knight Byrd wanted to do in executive session, as is her right with lawyer-client confidentiality.
Then, again, councilmen have talked about the idea of casting a "wider net," which could be an effort to get somebody from Charleston, Columbia or Beaufort, who has more experience in growth and development laws. Stay tuned to find out who it may be!
Comments Summerville Journal Scene
Dear Ryan:
Referring to Talk of the Town, November, 6, 2007, that "Group" you mentioned, which interviewed the four Republican candidates for House District 94, was made up of just a few of the very concerned citizens representing a much larger group which has come together to work on elections over the past few years. Correction please. Their aim is Not "towards placing stringent restrictions on growth" as you wrote. Their aim is to see integrity, independence and transparency in our locally elected officials. In this last House District 94 election "managed growth" was the clear issue but whatever the issue, integrity, independence and transparency in local government remain the ultimate goal of this particular group.
Mark Closson and Linda Shelbourne
Posted by: Mark Closson and Linda Shelbourne | November 12, 2007 at 09:15 AM
October 4, 2008 at 10:56 a.m. ( permalink | suggest removal )
1963 (anonymous) says...
Looks like Al Parish might have company for a number of years. According to zabasearch.com Peninger is either 47 or 48 years old. Wish he would have done someting else with his life.
October 4, 2008 at 11:02 p.m. ( permalink | suggest removal )
1973L82 (anonymous) says...
This crook has a rental unit in my neighborhood. He has been the most inconsiderate, disrespectfuly neighbor I've ever come across. What goes around comes around!
March 12, 2009 at 2:20 p.m. ( permalink | suggest removal )
1973L82 (anonymous) says...
This crook has a rental unit in my neighborhood. He has been the most inconsiderate, disrespectful neighbor I've ever come across. What goes around comes around!
March 12, 2009 at 2:21 p.m. ( permalink | suggest removal )
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