Daryl Heller’s ATM network operated with hallmarks of a Ponzi scheme, examiner’s report says

• By Chad Umble/LNP | LancasterOnline

The ATM investment network overseen by embattled businessman Daryl Heller showed the hallmarks of a Ponzi scheme, a new report found.

The report, issued Wednesday night by a court-appointed examiner in Heller’s bankruptcy case, found that most of the money paid to investors since 2021 by Heller’s Paramount Management Group was not coming from actual earnings from managing cash machines.

Between January 2021 and March 2025, Paramount only generated $38 million in net proceeds while making $407 million worth of payments to investors, the report found. Even without accounting for any of Paramount’s expenses for payroll, rent and maintenance, the company’s gross receipts of $161 million during the period could not have funded all the payouts to investors, the report found.

“With no other available funds to pay returns to earlier Investors, (Paramount) necessarily used funds from subsequent Investors to pay returns owed to earlier Investors,” the report said.

While other factors may have contributed to the demise of Paramount, the fundamental problem was that it was relying on money from new investors to pay old ones, the report said.

“As PMG was using subsequent Investors’ funds to pay earlier Investors, one would expect that PMG would fail when new Investor funds dried up. That is what happened to PMG,” the report said. “PMG was not able to survive without new Investors’ funds.”

While the report details elements of a fraudulent Ponzi scheme, the court filing announcing the report’s completion said it is not meant to reach a legal conclusion.

“The ultimate determination of whether Paramount Management Group LLC operated as a ‘Ponzi’ scheme is an issue for the Court,” reads the filing.

A Ponzi scheme is an investment that isn’t supported by an underlying business but instead relies on new investors being recruited to pay the returns of old investors. It is named for Charles Ponzi, who became famous for running such schemes in the early 1920s.

Investor impact

The report’s findings impact about 2,700 investors – many local to Lancaster County – who bought ATMs and then received monthly payments from a portion of the surcharge fees. After years of regular payouts, Paramount stopped making monthly payments in April 2024 to investors in the funds that were organized under Prestige Investment Group, leading to a lawsuit that August.

Investors won a $138 million judgment against Paramount in November and were awarded all of its ATMs when Heller failed to come through with a $455 million buyout. They also won a $2 million judgment against Heller personally, which he has appealed.

The Prestige investors have submitted claims totaling $542 million in Heller’s bankruptcy case, where the claims tally has reached $825 million.

Having repeatedly accused Heller in court filings of operating a Ponzi scheme, attorneys for the Prestige investors saw vindication in the examiner’s findings.

“The court-appointed Examiner in Daryl Heller’s bankruptcy case issued a comprehensive report confirming what the Prestige Funds have long asserted, but Heller kept hidden: he operated a massive Ponzi scheme,” read a Prestige Funds statement issued by attorney Josh Voss.

The statement said the examiner’s findings show a “classic Ponzi scheme” while demonstrating Heller’s lack of credibility and the need for a trustee to be appointed in the bankruptcy case to take over Heller’s remaining assets and determine how creditors should be paid.

A trustee would usurp Heller’s role as “debtor in possession” in his Chapter 11 bankruptcy case; he remains in control of his assets and recently filed a plan to pay some creditors by selling his companies.

“The Prestige Funds anticipate that a trustee will soon be appointed in the bankruptcy matter,” the Prestige statement read. “Then the creditors can get to the business of clawing back Heller’s ill-gotten gains and converting his assets to fund recoveries for his many victims. Heller’s reign of deceit is now coming to an end.”

Sari Placona, an attorney representing Heller, said in an email Thursday that she could not comment on the examiner’s report since she needed time to review it.

Investments in, money out

In addition to totaling Paramount’s revenue and showing that it wasn’t nearly enough to cover payments to investors, the report details an instance of money coming in from new investors and then immediately going out to make payments to old ones.

In 2023, the report says as an example, four wire transfers totaling $3,952,000 were sent between Nov. 27 and 29 from Prestige funds to a Paramount bank account. On Nov. 29, $3,037,764 was transferred from that Paramount bank account to another Paramount account and labeled as “for investor wires.” That same day, Paramount initiated 23 outgoing wires totaling $3,039,964 to various Prestige fund accounts.

“The express labeling of the transfer to the operating account as ‘For Investor Wires’ demonstrates that incoming Investor funds intended for the ATM purchase and deployment of ATMs were redirected … to pay returns owed to existing Investors,” the report said.

The examiner reports interviewing Heller on two occasions, once on July 28 and another time on Aug. 12, the day before the report was filed. Heller also responded to specific questions posed by the examiner, which are included as an exhibit to the report.

In one exchange, the examiner asks about the $161 million in total receipts for Paramount from January 2021 until March 2025, which amounts to about $40 million a year.

“That is not even close to accurate as only a partial picture. The revenue is substantially higher at PMG alone,” responds Heller, who writes “there are many pieces missing from your analysis.”

According to Heller’s response, the examiner isn’t looking at all the bank accounts and is also not considering entities owned by Paramount that didn’t have money flow back to Paramount. In addition, Heller said some of the revenue generated by the cash machines was paid directly by third parties and third party processors without being routed through Paramount.

Also, Heller wrote that there were affiliates with “hundreds of millions of revenue during this time period.”

In a footnote in his report, the examiner said that if any other accounts had income that was used to fund investor payments those would have been included in his analysis since he looked at the bank account through which the payments actually were made to investors.

“Secondly, to the extent (if any) that a subsidiary or affiliate had other funds available to pay the Investors but did not use those funds to pay the Investors, they are not relevant to whether PMG actually used subsequent Investors’ funds to pay earlier Investors during the Review Period,” the footnote said.