Highlighting Recent FBI “Ponzi” Scheme Investigations

FBI-Washington, D.C.--Given current market conditions, there has been no shortage of Ponzi investment schemes, perpetrators, and victims. These schemes are varied in their methods, but usually lure investors with the false promise of high financial returns or dividends not available through traditional investments.

This type of fraud is named after Charles Ponzi, who operated an enticing scheme in the early twentieth century that guaranteed investors a 50 percent return on their investment in postal coupons. Instead of investing the money he received, Ponzi simply used it to pay “dividends” to initial investors and pocketed the rest himself. The scheme fell apart when investors grew suspicious and funds dried up, making it impossible to make additional payouts and keep the ruse going.

“Too often investors are blinded by dreams of untold wealth,” said Assistant Director Kenneth W. Kaiser of the FBI’s Criminal Investigative Division. “These schemes highlight the need for law enforcement and regulatory agencies to be ever vigilant of white-collar crime both in boom and bust years. We also want to remind the public to exercise due diligence in selecting investments and the people with whom you entrust your money.”

“The bottom line is that individuals must approach investment opportunities with a dose of healthy skepticism,” said Supervisory Special Agent Stephen Kodak of the FBI’s National Press Office. “People are often to willing to suspend their disbelief if they think they will receive a fantastic payout. Just remember: if it sounds too good to be true, it probably is.”

There is no need to look much further than recent “Ponzi” scheme investigations to realize the scope of this matter. Recent press releases are listed below, with more available at www.fbi.gov.

On 01/05/2009, four Florida defendants were charged in a $1 billion Ponzi investor fraud scheme.
On 01/23/2009, a Broomall, Pennsylvania man was charged in a large-scale investment fraud that he used as a pyramid, or “Ponzi,” scheme to defraud investors of tens of millions of dollars between 1996 and 2008.
On 01/26/2009, a Heber Springs, Arkansas man was sentenced to federal prison for defrauding investors of $43 million in a Ponzi scheme.
On 01/26/2009, a North Haven, Connecticut man was sentenced to 48 months of in prison, followed by three years of supervised release, for operating a multi-million dollar Ponzi scheme in which he solicited investments for fictitious investment programs.
On 01/27/2009, the President of a Long Island, New York investment firm was charged in a $370 million Ponzi scheme.
On 02/05/2009, a grand jury in Seattle, Washington indicted three men for operating a $65 million Ponzi scheme.
On 02/24/2009, the New York FBI Field Office arrested an individual based on the operation of an international, Internet-based "gold unit" Ponzi scheme.
On 02/24/2009, a Forest Lake, Minnesota man was sentenced for his role in defrauding 519 people nationwide out of approximately $30 million in a Ponzi scheme operated under the name of the Joshua Tree Group.
On 02/27/2009, a former Brentwood, Tennessee financial advisor and owner of Park Capital Management Group (“PCMG”) admitted to operating an elaborate Ponzi scheme to defraud investors who deposited funds with PCMG for investment in brokered stocks and other marketable securities.
On 02/27/2009, a Chicago businessman was charged with luring two dozen investors into investing $4.7 million in commodity trading pools and using the money instead to fund two nightclubs, to pay gambling debts and other living expenses, and to make Ponzi-type payments to earlier investors.
On 03/04/2009, two Arizonans and two others were indicted for a Ponzi fraud scheme. A 90-count indictment alleges at least 300 victims invested $8 million during the scheme.
On 03/09/2009, a Marblehead, Massachusetts investment advisor was charged with wire fraud in connection with a Ponzi scheme to defraud two of his clients of more than $750,000.
On 03/12/2009, Bernard L. Madoff pled guilty to an 11-count criminal information and was remanded into custody related to a massive multi-billion dollar Ponzi scheme.
On 03/12/2009, Dennis R. Bolze was arrested in State College, Pennsylvania on federal wire fraud and money laundering charges associated with a Ponzi scheme.
On 03/18/2009, an Atlanta, Georgia currency trader was charged with operating a $25 million Ponzi scheme.
On 03/20/2009, Anthony Vassallo of Folsom, California was charged for his role in a massive Ponzi investment fraud scheme that brought in more that $40 million from 150 investors, many of whom he met in his church.
On 03/31/2009, Manyu Ogale was sentenced to 10 years in prison on a federal charge of mail fraud arising out of a Ponzi scheme under the guise of a foreign currency “hedge fund” that defrauded investors out of more than $23 million.

Erie County District Attorney's Office

Frank A. Sedita, III

Erie County District Attorney

PHONE: 716-858-2424

FAX: 716-858-7425

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