Home New Cases Trustee Schwartzer Sues Highest-Paid Broker in Multimillion-Dollar Sports Betting “Ponzi Scheme” for Clawback Transfers

Trustee Schwartzer Sues Highest-Paid Broker in Multimillion-Dollar Sports Betting “Ponzi Scheme” for Clawback Transfers


January 19, 2021, District of Nevada – Debtors Welscorp, Inc. and its co-debtor affiliates and principals (collectively, the “Debtors”) were operated as a” Ponzi scheme.” Debtors ran an allegedly sports betting investment business. Trustee Lenard E. Schwartzer recently initiated several lawsuits to avoid and recover monies allegedly paid in the “Ponzi scheme” to various defendants, because such payments were allegedly “preferential, actual fraudulent, and/or constructively fraudulent.”

According to the Court papers, Debtors John F. Thomas and Thomas Becker utilized the Debtor entities to raise nearly $40 million from approximately 600 investors as participants in ostensible online sports betting contracts, as part of this “fraud.” Third-party agents, who received generous commissions from the Debtors in return for capturing new investor money, often “lured the investors into the scheme.” 

Defendant Damian Ostertag was amongst the highest producing, and highest earning agents in the entire scheme. He was also among the highest-paid brokers in this “fraud,” earning commissions from 2016. Ostertag was allegedly “neither a registered broker nor was he associated with a registered broker” at the time that he earned these commissions. The lawsuit intends to avoid and recover monies previously paid to Defendant because such payments were “preferential, actually fraudulent, and/or constructively fraudulent.”

By way of background, on August 30, 2019, the Securities and Exchange Commission (“SEC”) filed a civil complaint in the U.S. District Court, District of Nevada, against Thomas, Becker, the Debtors, Ostertag, and other related parties, alleging multiple “securities violations.” As per the report of SEC forensic accountant, “only a small fraction of investor funds was used for sports betting.” A larger part was used either to “pay commissions” to sales agents (like Defendant), to pay Thomas and Becker’s “personal expenses” like rent and home renovations, “siphoned off to other entities,
” or used to make “Ponzi payments” to earlier investors. On December 4, 2019, Judge Gordon granted the SEC’s motion for a preliminary injunction against the Defendant, as well as the Debtors, enjoining them from “defrauding more investors” and placing an “immediate freeze on their monies and assets.”