After Probe By Boston Police, Suffolk County DA Brings Ponzi And Loan-Sharking Charges Against Alleged ‘Common And Notorious Thief’; Investigators Say Investors Were Told They Were Providing Loans To Fund Loans At A Higher Rate

Some members of the Profitable Sunrise HYIP have said they were providing loans to “Roman Novak,” who lent out the money at a higher rate and created profits for the business and its promoters. Profitable Sunrise has been hit by cease-and-desist orders or Investor Alerts in at least 25 U.S. states and Canadian provinces.

Profitable Sunrise allegedly had five plans, all of which promised absurd daily interest rates to investors and one of which was billed as the “Long Haul” plan.

Prosecutors in Massachusetts today described a similar case, this one involving an entity known as Viking Financial Group Inc and its alleged operators, Steven and Lori Palladino. The couple is accused of operating a Ponzi scheme.

The office of Suffolk County District Attorney Daniel F. Conley described Steven Palladino as “common and notorious thief based on more than two dozen prior larceny convictions in Suffolk Superior and Norfolk Superior courts.”

From a statement by prosecutors (italics added):

Prosecutors allege that Viking borrowed money from investors, who were told by Steven Palladino that the funds would be used to provide loans at a higher interest rate.  Very little of the money was used to make loans, prosecutors said, and it instead funded a lavish lifestyle for the Palladinos.  Money borrowed from new investors was then used to repay earlier investors and to make monthly interest payments to all of the investors, prosecutors said.

Transactions show that investors’ money was often transferred from Viking’s account into personal accounts held by the Palladinos and used to cover personal expenses including a vacation in the Bahamas, rent for Steven Palladino’s mistress, and hundreds of thousands of dollars paid to casinos to cover apparent gambling losses, prosecutors said.

In addition, Steven Palladino allegedly made use of investors’ funds when he paid $350,000 to satisfy a condition of his probation on a 2007 Superior Court conviction for defrauding an elderly relative.

Prosecutors alleged that fake loans were entered in Viking’s corporate books to make them appear balanced.  The named recipients of these made-up loans never applied for or received loans from Viking, prosecutors said.

The indictment also alleges that three of the real loans Viking extended in 2007 and 2008 charged interest rates well beyond the 20 percent maximum allowed under state law.  Of those loans, prosecutors said two charged interest exceeding 60 percent and a third charged over 200 percent interest.

The state of California alleged last week that Profitable Sunrise was breaking both securities laws and lending laws in the state.