BULLETIN: In a case that could send shockwaves across the culture of promoting scams and accepting payments from scams, a New York woman who turned a blind eye to Richard Piccoli’s long-running Ponzi scheme in New York state has been sentenced to 18 months in federal prison for misprision of a felony and willful failure to file tax returns.
Kathleen Fuoco, 60, of West Seneca, N.Y., pleaded guilty to the charges in June. She was sentenced today in Buffalo. Piccoli, 83, was sentenced to 20 years in prison last year. He became infamous in the Buffalo region for targeting people of faith in the scheme.
Fuoco knew Piccoli was operating a scam, but did not report him, prosecutors said in June. Her failure to report the scheme brought about the misprision charge and also resulted in an agreement with prosecutors in which a financial judgment of $25 million would be placed against Fuoco, the total amount of restitution due victims.
Piccoli operated a firm known as Gen-See Capital Corp., and directly targeted Christians and senior citizens.
“Our seniors and clergy are absolutely pleased with Gen-See’s Re-Investment Program,†Piccoli said, according to marketing materials gathered by investigators as evidence in the case.
The Piccoli prosecution was brought after an undercover sting by the U.S. Postal Inspection Service and the IRS.
After Fuoco’s guilty plea in June, U.S. Attorney William J. Hochul said “the public should know that if you attempt to defraud any hard working citizen or turn a blind eye while someone else is committing fraud, you will be caught and prosecuted to the fullest extent of the law.â€
Hochul built on his earlier remarks after Fuoco’s sentencing today.
“The best defense for investors is to conduct your own due diligence and research,” he said. “When unscrupulous defendants take advantage of others through fraud, however, my office stands ready to bring the full force of law to punish the crime.â€
Misprision of felony is a charge that serial promoters of online scams such as autosurfs, HYIPs and 2×2 matrix cyclers potentially could face. The schemes proliferate in no small measure because promoters who play dumb to the fraud create the conditions that make it possible for the “programs” to go “viral” on the Internet.
Some promoters help fuel scheme after scheme after scheme, perhaps saying later that they were surprised the programs proved to be fraudulent.
Such bids to create plausible deniability have been unmasked by the U.S. Secret Service in a number of investigations since 2008. In some cases, the agency has used undercover identities to join the schemes and later advised federal judges that the agents were instructed by members of the schemes to avoid using certain phrases in sales pitches to minimize the chance of getting caught.
In certain undercover operations, the Secret Service revealed it had agents in rooms or venues from which scammers were delivering sales pitches to an audience. Some schemers have been kept under surveillance for weeks by agents.
Court documents in the alleged AdSurfDaily (Florida) and INetGlobal (Minnesota) Ponzi schemes — and in the alleged Regenesis 2×2 (Washington state) Ponzi scheme — show that agents moved from location to location and even city to city to build evidence against Ponzi schemers.
Meanwhile, court documents show that undercover Secret Service operatives and their state law-enforcement colleagues even have posed as interested investors and walked right through the front doors of offices operated by suspected fraudsters.
Court filings in the alleged Legisi Ponzi scheme brought by the SEC show that the behavior of the alleged schemer changed after he came to understand he was under investigation — a development that allegedly led to even greater chicanery to hide the scheme.
