BULLETIN: Rhode Island Man, 81, Ran ‘Self-Contained’ Ponzi Scheme For 10 Years; Martin B. Feibish Pleads Guilty To Defrauding $5 Million From Florida Resident

BULLETIN: An 81-year-old Rhode Island man ran a “self-contained” Ponzi scheme between 2001 and 2011 and defrauded a Florida investor out of $5 million, federal prosecutors said.

Martin B. Feibish of Providence now joins a list of senior-citizen Ponzi swindlers. He pleased guilty today to one count of mail fraud and one count of filing a false tax return.

Feibish, described by the office of U.S. Attorney Peter F. Neronha as an insurance agent, investment broker and creator of two investment companies, potentially faces 23 years in federal prison. Sentencing has been scheduled for June 29.

Creating “false and fictitious investment schemes” were part of the scam, with Feibish falsely representing that some payments the victim received were “returns on the investor’s investments,” prosecutors said.

In reality, prosecutors said, “the funds he provided to the investor were actually the result of a ‘Ponzi Scheme’ he perpetrated with the investor’s own money.”

State records in Rhode Island show that the Department of Business Regulation brought Feibish up on civil charges last year amid assertions he possibly was running a “selling away” scam in which he was hawking investment products not held by the brokerage firm and/or selling products without its knowledge.

When confronted on Feb. 23, 2011, Feibish allegedly told a colleague he had created a bogus investment vehicle known as “MegaTrust,” describing it as a fraudulent mortgage-backed securities product.

The investor allegedly had a net worth of $6 million when she began to do business with Feibish.

Feibish, according to the allegations, kept the investor’s records in a “three-inch thick file” that he produced from “under his desk” when questioned. The huckster allegedly admitted he had forged documents and stolen the investor’s money, blaming his conduct on a gambling problem.