PatrickPretty.com

Tag: Joseph Forte

  • WRAP-UP: Marine Corps Officer Tells Judge Ponzi Schemer Who Fleeced Seniors, Charities ‘Violated Every Character Trait I Hold Dear’

    EDITOR’S NOTE: This column summarizes three Ponzi cases: Joseph Forte, Sean Healy and Tom Petters. Forte has been sentenced; Healy has been convicted, and Petters is waiting to hear his fate from a Minnesota jury. The cases vary widely in size and scope, but demonstrate the terrible consequences of Ponzi schemes on individual investors and charitable institutions

    Joseph Forte scheme.

    A U.S. Marine Corps officer speaking for victims of the Joseph Forte Ponzi scheme in Philadelphia yesterday told a federal judge Forte’s actions caused his family’s charitable foundation to suffer a $15 million loss.

    Lt. Col. William Hooper, a former Marine Corps aviator and member of the U.S. Marine Corps Reserves, said his father suffered a stroke after learning Forte had plundered The Thornton D. and Elizabeth S. Hooper Foundation of Radnor, Pa.

    ponzinewsWilliam Hooper’s father, Bruce Hooper, himself a former Marine, served as president of the Marine Corps University Foundation (MCUF) and is a trustee and member of the Investment Subcommittee, according to the MCUF website. Bruce Hooper is the vice president of the Thornton D. and Elizabeth S. Hooper Foundation and the vice chairman of the Foreign Policy Research Institute of Philadelphia.

    William Hooper, speaking for the Hooper family at Forte’s trial, said Forte’s actions “violated every character trait I hold dear,” according to the Delaware County Times.

    Meanwhile, a woman who lost $109,000 she had inherited from her mother by investing it with Forte called him a “bastard.”

    Forte’s Ponzi scheme unraveled in 2008, after operating for 12 years. George Clark, a U.S. Postal inspector, said in an affidavit that Forte simply made up numbers and collected money until the bitter end.

    “The last statement received by investors for the third quarter of 2008 indicates that the fund had a return of 18.88% for the quarter and that the Joseph Forte LP fund’s total value as of September 30, 2008 was $154,700,189,” Clark said.

    In truth, Clark said, the value of Forte’s trading account was only $150,000. The account was closed in October 2008, but Forte continued to collect money from clients until Dec. 19, Clark said.

    “According to Forte, all reported returns were false in their entirety and were simply numbers that [he] fabricated,” Clark said. “Forte admitted that in every quarter from 1996 through the end of 2008, the reported returns were false.”

    Forte was sentenced to 15 years in prison. He also was ordered to pay $34.8 million in restitution.

    See a story in the Delaware County Times.

    Sean Healy scheme

    Luxury cars and Ponzi schemes go together like money and politics. Federal prosecutors have seized more than 20 cars in the alleged Scott Rothstein Ponzi in Florida, for example. One of them had a price tag of more than $1.5 million.

    Before the Rothstein case came on the Feds’ radar screen last month, there was the case of Sean Healy. It, too, has a Florida tie, although the prosecution occurred in Pennsylvania.

    Healy, 38, of Weston, Fla., was charged in a 55-count indictment unsealed last month with multiple counts of wire fraud, mail fraud, money laundering and obstruction of justice.

    Prosecutors said Healy “spent the money to fund a lavish lifestyle.”

    Purchases included “numerous exotic vehicles and sport cars, including a Bentley and several Ferraris, Lamborghinis and Porsches worth over $2.3 million,” prosecutors said.

    Obstruction of justice was charged because Healy thwarted a grand jury by providing “phony bank statements and phony trading records, indicating that the Pennsylvania investor’s money was used for legitimate trading activity in stocks and commodities,” prosecutors said.

    “When the authentic records were obtained, they revealed that Healy had simply spent the money on his extravagant lifestyle and used some of it to pay back earlier investors who he defrauded between 2003 and 2008,” prosecutors said.

    The grand-jury probe began in March, after an investor who had been scammed in Pennsylvania sued Healy and his wife, Shalese Rania Healy, in U.S. District Court in the Southern District of Florida, alleging that Pennsylvania investors had lost $14.6 million with Healy between April 2008 and February 2009.

    In addition to the automobiles, Healy also bought a $2.4 million waterfront mansion furnished with more than $2 million of home improvements, plus $1.5 million in men’s and women’s jewelry.

    Healy pleaded guilty Monday in Harrisburg to two counts of wire fraud and one count of unlawful monetary transactions. He faces up to 50 years in prison.

    Tom Petters’ scheme

    Minnesota businessman Tom Petters is accused of operating a $3.65 billion Ponzi scheme. The jury began to deliberate late Monday.

    Deliberations continued Tuesday. No verdict was reached, and the jury was dismissed until Monday because of the Thanksgiving holiday in the United States.

    Prosecutors said Petters presided over phantom sales of consumer electronics to big-box retailers, fleecing investors out of millions. His defense counsel acknowledged that fraud had occurred, but blamed it on subordinates.

  • Joseph Forte Charged With $50 Million Ponzi Fraud

    First the SEC sued fund manager Joseph Forte, accusing him of running a Ponzi scheme that fleeced investors out of tens of millions of dollars.

    Now Forte has been charged criminally with mail fraud. Authorities said his victims included a church, a charity and a private school.

    The SEC sued Forte, 53, of Broomall, Pa., on Jan. 7, accusing him of running a $50 million Ponzi scheme over a period of 12 years. The U.S. Postal Inspection Service entered the case, filing an affidavit for an arrest warrant after learning Forte used the mails to defraud dozens of investors.

    Authorities said the scheme collapsed when Forte no longer could make redemptions because he wasn’t getting enough money from new investors to pay off earlier investors.

    “Between 1996 and 2008, Forte raised tens of millions of dollars in investment capital from roughly 80 investors, including at least one charitable foundation, one church, and one private school,” said George Clark, a postal inspector, in an affidavit.

    “Several investors have advised government agents that they had been directed to the fund through ‘word of mouth’ and were attracted to the fund’s reported gains which ranged from at least 18% to 37%,” Clark said.  “At no time did the fund report a loss to investors, even though Forte consistently lost money on his actual investments.”

    Forte provided fraudulent information to an accountant to advance the scheme, Clark said. The accountant prepared clients’ statements based on the bogus information, using the mails to send the statements. The accountant has not been charged.

    Feds: ‘False’ In Its Entirety

    Forte’s Ponzi scheme was just an exercise in creative writing, authorities said. While he told clients the fund had more than $154 million, it actually had $150,000.

    “The last statement received by investors for the third quarter of 2008 indicates that the fund had a return of 18.88% for the quarter and that the Joseph Forte LP fund’s total value as of September 30, 2008 was $154,700,189,” Clark said.

    In truth, Clark said, the value of Forte’s trading account was only $150,000. The account was closed in October, but Forte continued to collect  money from clients until Dec. 19, Clark said.

    “According to Forte, all reported returns were false in their entirety and were simply numbers that [he] fabricated,” Clark said. “Forte admitted that in every quarter from 1996 through the end of 2008, the reported returns were false.

    “Forte told investigators that he believed that he would realize gains at some point and that he would be able to return to investors their principal plus their reported returns,” Clark continued. “Between 1996 and 2008, however, Forte never earned the returns that he had reported. In fact, an examination of records between 1998 and 2008, indicates that over that time period, Forte’s trading account suffered aggregate trading losses of $3.3 million.”

    Despite the losses, Clark said, new investors continued to give Forte money because he shielded the losses and reported high rates of return. Forte did not even execute trades for sustained periods of time, simply gathering money and depositing it in a bank.

    “[F]rom December 2004 to December 2008, there were 26 months in which Forte made less than three trades, including 16 months in which Forte made no trades whatsoever,” Clark said.

    Forte told Clark that he  halted his actual trading for long periods of time to practice using his “trading models.”