Alfred Gerebizza Arrested In $105 Million Ponzi Case; PP Blog Received Threatening Communication About Alleged Fraud Caper Last Year
UPDATED 5:25 P.M. EDT (U.S.A.) Alfred Gerebizza has been charged with mail fraud and tax crimes in a superseding indictment in the Daniel Spitzer Ponzi case, which alleged both domestic and offshore fraud. The SEC initially charged Spitzer civilly in June 2010, accusing him of “moving investor money through a complex network of foreign bank and brokerage accounts” and spending more than $900,000 “in cash at the Wynn Las Vegas Casino.”
Spitzer later was charged criminally after investigations by the FBI, the U.S. Postal Inspection Service and the IRS.
Gerebizza, 56, formerly resided in the Chicago suburb of Crystal Lake. A criminal indictment against him was unsealed last month, and Gerebizza surrendered in Atlanta, federal prosecutors in the Northern District of Illinois said yesterday. He is in federal custody at a prison facility in Chicago, according to records.
The superseding indictment naming Gerebizza as a new criminal defendant with Spitzer alleges that Gerebizza was a pitchman who “held himself out as a trader for a dozen investment funds, known collectively as the ‘Kenzie Funds,’ purportedly operated by Kenzie Financial Management in the U.S. Virgin Islands.”
Spitzer was a Kenzie principal, prosecutors said. He has been charged with 10 counts of mail fraud.
Gerebizza faces 10 counts of mail fraud and six counts of filing bogus tax returns. Both men were named in forfeiture allegations that seek $34 million.
“Through sales agents and various marketing materials, they informed investors and potential investors that their investments would be used primarily in foreign currency trading, that the Kenzie Funds had never lost money, and had achieved profitable historical returns,” federal prosecutors said of Spitzer and Gerebizza. “The defendants had to continually raise funds through the solicitation of new investors in the Kenzie Funds to make payments on investments made by earlier investors, all of which they concealed and intentionally failed to disclose to both new and earlier investors. Ultimately, between 2004 and July 2010, the defendants allegedly raised approximately $105 million from investors, misappropriated a significant portion of those funds, and caused losses totaling approximately $34 million.”
On Sept. 12, 2010, the PP Blog received a communication purportedly from Gerebizza that threatened a lawsuit if the Blog did not remove Gerebizza’s name and/or alter or delete comments from readers.
“I will sue you personally as well as your web site for slander as well as other charges,” the communication read in part.
The Blog did not submit to the threat. Instead, the Blog reported on the threat.
It is somewhat common for the PP Blog to receive threatening communications related to its coverage of Ponzi probes.
Hm, if I mention my name without authorizing myself, can I sue myself?? It’s completely ludicrous that someone would threaten a lawsuit for merely mentioning your name. Idiots!!!!!!!!!
Geez, it’s worse than that! How do you sue somebody for slander for written statements? DOH!!!
Daniel Spitzer today was sentenced to 25 years in federal prison, the office of U.S. Attorney Zachary T. Fardon of the Northern District of Illinois said.
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Suburban Man Sentenced To 25 Years In Federal Prison For
Cheating 455 Investors Of $105 Million And Causing $34 Million Loss
CHICAGO — A northwest suburban man was sentenced today for engaging in a lengthy investment fraud scheme in which he and a co-defendant swindled approximately $105 million from 455 investors who invested in funds they purported to operate. The defendant, DANIEL SPITZER, pleaded guilty to 10 counts of mail fraud last July on the day his trial was scheduled to begin in Federal Court. Spitzer misused the money he raised from investors for his own benefit and to make Ponzi-type payments to investors, resulting in a loss of $33.98 million to at least 279 victims, many of them elderly.
Spitzer, 55, of North Barrington and formerly of the U.S. Virgin Islands, caused “very substantial damage,” U.S. District Judge James Zagel said in imposing the sentence today, a day after he ordered Spitzer into federal custody. The judge also ordered restitution of $33.98 million.
Spitzer engaged in an “extended act of greed,” between late 2004 and early 2010, Assistant U.S. Attorney Madeleine Murphy argued at today’s hearing.
According to court records, Spitzer was the principal officer and sole shareholder of Kenzie Financial Management; the sole manager and member of Kenzie Services, LLC; the president of Draseena Funds Group, Corp.; the manager of DN Management Company, LLC; and the manager of Nerium Management Company.
Co-defendant ALFRED GEREBIZZA, 59, formerly of Crystal Lake and Palm Beach Gardens, Fla., was the secretary and a director of Draseena and a sales agent for the Kenzie Funds, who also held himself out as a trader. Gerebizza was convicted at trial last July of 10 counts of mail fraud and six counts of federal income tax fraud. He is in federal custody awaiting sentencing.
Through these entities, Spitzer controlled 12 investment funds collectively known as the “Kenzie Funds.” Spitzer and Gerebizza offered and sold to the public investments in the various Kenzie Funds in the form of membership interests and limited partnerships. Through sales agents and various marketing materials, they informed investors and potential investors that their investments would be used primarily in foreign currency trading, that the Kenzie Funds had never lost money, and that they had achieved profitable historical returns. The defendants had to continually raise funds through the solicitation of new investors in the Kenzie Funds to make payments on investments made by earlier investors, all of which they concealed and intentionally failed to disclose to both new and earlier investors. Although Spitzer and Gerebizza falsely represented to prospective investors and current investors that different Kenzie Funds had different levels of risk and different investment strategies, they commingled the money invested in all 12 Kenzie Funds, then misappropriated a significant portion, and only invested less than one-third of the approximately $105 million raised from investors.
The defendants represented to investors that the Kenzie Funds had rates of returns ranging from 4.52 percent to 13.54 percent over the prior five years, although the bank accounts for the Kenzie Funds reflected that the total net return during that period was less than one percent. As of June 30, 2009, they represented that the Kenzie Funds were worth approximately $250 million when, in fact, the Funds collectively had only approximately $4 million in their bank accounts.
The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; Tony Gómez, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago; and James C. Lee, Special Agent-in-Charge of the Chicago Office of the Internal Revenue Service Criminal Investigation Division. The Chicago Regional Office of the Securities and Exchange Commission assisted the investigation.
The government was represented by Assistant U.S. Attorneys Madeleine Murphy, Jason Yonan, and Jessica Romero.
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Source: http://www.justice.gov/usao/iln/pr/chicago/2015/pr0129_02.html