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Tag: Matthew B. Pizzolato

  • BULLETIN: Appeals Court Upholds Federal Judge Who Departed From Sentencing Guidelines And Prosecution’s Recommendation — And Imposed Maximum Prison Term On Louisiana Ponzi Schemer

    The U.S. Court of Appeals for the 5th Circuit has unanimously upheld the 30-year sentence imposed last year on Ponzi schemer Matthew B. Pizzolato by U.S. District Judge Lance M. Africk of the Eastern District of Louisiana.

    Although Pizzolato had worked out a plea deal with prosecutors that included a nonbinding recommendation for Pizzolato to serve a maximum term of about 15 and a half years, Africk disregarded the recommendation and ordered an upward departure from federal sentencing guidelines  — effectively doubling the term prosecutors had sought.

    Africk reasoned that Pizzolato’s $19.5 million Ponzi had subjected senior citizens and other vulnerable members of society to severe and ongoing harm, telling Pizzolato in open court that his fraud was one in which “a lot of people of modest means lost everything.”

    Written words on “cold” court documents “will never reflect the depth of pain” of the victims, Africk told Pizzolato.

    “In particularly despicable fashion, many of your victims were the most susceptible members of our society; all looked forward to some modest degree of comfort during their golden years,” Africk said.

    “Weaving a web of deception and practicing predatory acts, you ruthlessly pounced on some of our most vulnerable citizens. You falsely represented yourself to be an attorney. These people trusted you with their life savings and you, in turn, devastated them. You stole savings desperately needed by these fine people to achieve the most basic needs of their life. Worrying that these needs will go unmet, many of our victims fear they will never recover from their loss. I feel the same.”

    In sentencing Pizzolato to the 30-year maximum, Africk rejected the convicted swindler’s claims that he was an unsophisticated, 26-year-old man. The judge also considered the psychological damage suffered by victims, the number of victims (180), the reach and complexity of the scheme and the duration of the scheme (three years).

    Africk remarked that he had “never seen a fraud-based crime more horrendous than the one” Pizzolato engineered, according to court records.

  • PONZI NEWS/NOTES: Judge Says Matthew Pizzolato ‘Swindled The Salt Of The Earth’; Feds Allege New Scheme In New York; Henri Zogaib Arrested Again In Florida

    EDITOR’S NOTE: The briefs below summarize recent developments in Ponzi cases or actions in new Ponzi cases.

    Sentenced: Matthew B. Pizzolato, 26, Tickfaw, La. Ripped off senior citizens in Ponzi scheme.

    In sentencing Pizzolato to 30 years in federal prison, U. S. District Judge Lance M. Africk said Pizzolato “stole from hard working Americans” and “swindled the salt of the earth,” prosecutors noted.

    “[B]ecause of you,” the judge noted, “many must find ways to pay for their daily bread.”

    Prosecutors called the 30-year sentence “powerful.”

    “[The] powerful 30-year federal prison sentence handed down by U. S. District [Judge] Africk against convicted swindler Matthew Pizzolato will hopefully serve as a stark deterrent to those calculating predators who, like Pizzolato, may seek to prey on the trust and innocence of hard working citizens,” said U.S. Attorney Jim Letten. “The human wreckage of broken lives, dreams, and peace of mind — as well as stolen life savings — is shockingly evident in this case and in the tragedies of the victims whom Pizzolato hunted. Our hope is that these decent, trusting victims can begin to find some sense of justice and peace knowing that this criminal will not steal again.”

    A veteran FBI agent said members of the public would serve themselves well by imagining how a Ponzi scheme aimed at senior citizens could cripple entire families.

    “Mr. Pizzolato targeted senior citizens for his own gain,” said David Welker, FBI special agent in charge. “Personalizing this — what if it was your own mother, father or grandparent? Mr. Pizzolato’s actions were reprehensible and his punishment reflects the seriousness of his crime.”

    The IRS is well-equipped to peel back layers of the Ponzi onion, a criminal investigator said.

    “Special Agents of IRS Criminal Investigation are highly trained investigators who specialize in financial crimes of greed,” said Michael J. De Palma, special agent in charge of the IRS Criminal Investigation Unit. “We are committed in our efforts and will continue to work with our Law Enforcement partners and the United States Attorney’s Office to pursue evidence of criminal activity wherever it leads.”

    Postal inspectors have prioritized the investigation of crimes against senior citizens, an official said.

    “Frauds against the elderly are a priority for the Postal Inspection Service and we will continue to work closely with our partners to aggressively investigate these types of crimes,” said Keith E. Milke, U. S. postal inspector in charge.

    Accused: Laurence M. Brown, a certified public accountant in Armonk, N.Y. Brown was arrested on allegations of securities fraud, wire fraud and money-laundering. Prosecutors said he fleeced investors in a $2 million Ponzi scheme involving a purported gas pipeline in Tennessee. Brown was sued separately by the SEC.

    One need not pull off a Bernard Madoff-sized fraud to get the attention of the Feds, a top prosecutor said.

    “Laurence Brown allegedly concocted a scheme that fleeced clients and fattened his own wallet,” said U.S. Attorney Preet Bharara. “[The] charges show that you do not have to be a billion-dollar Ponzi schemer to get our attention. We are committed to rooting out financial fraud wherever it may hide.”

    Investors were duped into putting money into a company known as Infinity Reserves-
    Tennessee Inc. The SEC also charged Ronald J. Mangini in its civil case, saying he and Brown fraudulently sold securities and misappropriated the money for their own use. Mangini also is an accountant, the SEC said.

    “In fact,” the SEC said, “the securities Brown and Mangini sold were fictitious.

    “Infinity Reserves is the name of a company owned by one of their clients, and the company’s principal asset is a now defunct natural gas pipeline in Tennessee,” the agency continued. “Without the knowledge or authorization of the client, who is the sole shareholder of Infinity Reserves, Brown and Mangini have been falsely holding themselves out to investors as senior officers of Infinity Reserves with authority to sell the phony securities at issue.”

    Arrested: Former Grand Am racecar driver Henri Zogaib has been arrested again after making bail in the original case filed against him in Florida, WFTV reports.

    As the original Ponzi probe progressed, investigators discovered other victims, including NASCAR drivers, the station reported.

    Zogaib’s bail now has been upped to $2.2 million, and there may be other victims, the station reported. Bail on the original arrest was set at $100,000.

    Guilty plea: Donald Anthony Young, 38, of Palm Beach, Florida, has pleaded guilty to one count of mail fraud and one count of money laundering. Federal prosecutors charged him in a $25 million fraud scheme involving companies operating in Pennsylvania.

    “He solicited individuals to invest with him, claiming that their funds would be invested in the stocks of large stable companies,” prosecutors said. “Ultimately, Young obtained more than $95 million from his investors. Instead of investing all of these funds as promised, Young allegedly diverted more than $25 million of investor funds for his own use, purchasing, among other things, luxury homes for himself in Palm Beach, Florida, Coatesville, Pennsylvania, and Northeast Harbor, Maine.

    “When investors requested redemptions, Young was forced to liquidate other investors’ funds to make the pay outs,” prosecutors said.

    Young also tried to obstruct the SEC probe, prosecutors said.

    “When the United States Securities and Exchange Commission opened an investigation into Young’s business, Young attempted to obstruct the investigation by providing false and misleading information to the SEC and by refusing to provide the SEC documents, to which it was legally entitled.”

    Young used $1.9 million in funds stolen from investors “to purchase his luxury home in Palm Beach,” prosecutors said.

    In January, U.S. Attorney General Eric Holder ventured to the Palm Beach area, warning fraudsters they were writing their own tickets to jail.

    Young faces up to 30 years in prison when sentenced in October, prosecutors said.

  • SENIORS HARMED: Judge Issues Findings In CFTC Case Against Matthew B. Pizzolato; Says Investors Lost Retirement Savings In Scheme

    A Louisiania man charged criminally in an alleged Ponzi scheme and sued civilly on the same day last month lied to investors, some of whom liquidated retirement savings and annuities only to suffer massive losses by entrusting funds to Matthew B. Pizzolato, a federal judge has ruled.

    The case against Pizzolato is proceeding on separate tracks: a criminal prosecution by U.S. Attorney Jim Letten with the help of the FBI, the IRS, the U.S. Postal Inspection Service and the State of Louisiana Office of Financial Institutions, and a civil prosecution brought by the Commodity Futures Trading Commission.

    U.S. District Judge Mary Ann Vial Lemmon of the Eastern District of Louisiana now has extended an asset freeze, enjoined Pizzolato from breaking commodities laws and issued some findings in the civil case.

    Pizzolato is  26. He formerly resided in Tickfaw.

    Among Lemmon’s findings were that Pizzolato and his co-defendants in the civil case — William Guidry, 35, of Plano. Texas, and Jacksonville, Fla., and Capital Funding Consultants LLC of Covington, La. — ripped off senior citizens. Guidry and Capital Funding’s assets also have been frozen, and they have been enjoined from breaking the law.

    “Specifically, the order finds that Pizzolato, as part of a broader scheme in which he solicited $19.5 million, obtained more than $3.1 million from 24 mostly elderly investors, which he gave to Guidry to invest,” CFTC said.

    “Despite representing to these elderly investors that their funds would be invested in safe, secure investments with guaranteed rates of return, Pizzolato gave the funds to Guidry to trade high risk commodity futures, among other things,” CFTC continued. “The order also finds that Guidry and Capital Funding misappropriated more than $221,815.53 of investor funds for personal purposes, and used some of those misappropriated funds to trade commodity futures in accounts owned by Capital Funding. The investors were not told about Guidry’s commodity futures trading losses. The order further finds that Guidry and Capital Funding commingled commodity pool participants’ funds with the funds of other persons.”

    In the criminal case, which is being heard by U.S. District Judge Lance M. Africk, Pizzolato was charged with 52 counts of mail fraud, two counts of wire fraud, seven counts of money laundering, and single counts of securities fraud, obstruction of justice and witness tampering.

    He faces more than 1,100 years in prison and a fine of more than $16 million, if convicted on all counts. As many as 160 people were duped, prosecutors said.

    Prosecutors said Pizzolato attempted to silence employees with bribes of $20,000 and get them to destroy records to cover up the scheme. Meanwhile, they said Pizzolato obstructed justice by stealing documents that could incriminate him from the home of a client.

    Among the luxury items Pizzolato purchased with investors’ money were a BMW 750LI, a Mercedes Benz S430V, a Range Rover Sport and a Chevrolet Corvette, prosecutors said. He also bought sports tickets, a $35,000 engagement ring, a $500,000 home in Ponchatoula, La., and spent $35,000 on Carnival cruises.

    All in all, Pizzolato took about $19.5 million from clients and spent “nearly all” of it, prosecutors said.

  • BREAKING NEWS: Louisiana Man Indicted In Alleged $20 Million Ponzi Scheme Targeting Senior Citizens; Prosecutors Allege Witness Tampering, Obstruction

    UPDATED 9:44 P.M. ET (U.S.A.) A Louisiana man has been charged in a 64-count indictment with operating a $20 million Ponzi scheme that fleeced retirees, federal prosecutors said today.

    So many fraud counts were filed against Matthew B. Pizzolato that he faces more than 1,100 years in prison if convicted of all of them. As many as 160 people were duped, prosecutors said.

    Pizzolato, 26, of Tickfaw, was charged with 52 counts of mail fraud, two counts of wire fraud, seven counts of money laundering, and single counts of securities fraud, obstruction of justice and witness tampering.

    It was the second time this week prosecutors alleged witness tampering in a major Ponzi scheme case. Jeffrey Lane Mowen was charged in Utah Nov. 18 with attempting to hire a man to kill four witnesses in a  case against him.

    In the Pizzolato case, prosecutors said he attempted to silence employees with bribes of  $20,000 and get them to destroy records to cover up the scheme. Meanwhile, prosecutors said Pizzolato obstructed justice by stealing documents that could incriminate him from the home of a client.

    pizzolatoartWhen the client called authorities, Pizzolato returned documents that he altered after stealing them,  prosecutors said.

    A veteran FBI agent called the crimes beyond the pale.

    “It is unconscionable that in this stressful economy senior citizens would be targeted and defrauded of their life savings, said Special Agent in Charge David Welker. “We have an obligation to aggressively investigate crimes against those citizens who are most vulnerable. The FBI and our law enforcement partners will continue to aggressively pursue those who target our most vulnerable citizens.”

    Federal agencies are working together to put an end to the Ponzi plague in the United States, said U. S. Attorney Jim Letten of the Eastern District of Lousiana

    “Today’s indictment demonstrates our resolve, along with our partners in federal law enforcement, including the FBI, IRS and U.S. Postal Inspection Service, to aggressively investigate and pursue those who seek to take advantage and prey upon those among us, including our senior citizens,” Letten said.

    The Office of the Louisiana Commissioner of Securities assisted in the probe, Letten said.

    Pizzolato had offices in Hammond, Covington, Lake Charles, Baton Rouge, and also conducted business in Greater New Orleans.

    He “lured his potential victims through advertisements in the local daily newspapers in New Orleans, Baton Rouge and Hammond by promising rates of returns that were higher than market rates for CDs or U.S. Treasury Bills, prosecutors said.

    Among the words Pizzolato used to lure investors into a false sense of security were “guaranteed”, “safe”, “conservative”, “insured”, and “no-risk,” prosecutors said.

    Despite his assurances that clients’ money had been placed in U.S. Treasury Bills, CDs and other government-backed securities, Pizzolato “used the investors’ money to purchase luxury items, to make payments totaling millions of dollars to friends and family, to invest in high-risk futures trading and/or commercial real estate, and to provide lulling payments to investors in an effort to conceal the true nature of the Ponzi scheme,” prosecutors said.

    Among the luxury items he purchased with investors’ money were a BMW 750LI, a Mercedes Benz S430V, a Range Rover Sport and a Chevrolet Corvette, prosecutors said. He also bought sports tickets, a $35,000 engagement ring, a $500,000 home in Ponchatoula, La., and spent $35,000 on Carnival cruises.

    All in all, Pizzolato took about $19.5 million from clients and spent “nearly all” of it, prosecutors said.

    Since 2005, prosecutors said, Pizzolato either operated, owned or was affiliated with several companies: Gulf Region Guaranty Inc. (Gulf Region Guaranty); Acadian Guaranty Group LLC; Allegiance Financial LLC; Annuity Presets LLC; Annuity Recovery Services LLC; Anova Marketing Systems LLC; Anytime Fitness of Sulphur LLC; Cornerstone Wealth Management LLC; Global Assured Financial Inc.; Green Pelican Group Inc.; Gulf South Guaranty Inc.; Gulf States Guaranty LLC; GRG Holdings LLC; GRG I LLC; GRG II LLC; Matt P LLC; National Insurance Advisors LLC; Pelican Guaranty Group Inc. (Pelican Guaranty); and Spectrum Lending Group LLC.

    If convicted, he faces up to 20 years in prison for each count of mail fraud, wire fraud, securities fraud and witness tampering, and up to 10 years for each of the money laundering and obstruction of justice charges. Meanwhile, Pizzolato faces fines of up to $16 million.

    Pizzolato was hit with 56 counts that could result in a maximum sentence of 20 years each if convicted of all of them, meaning he potentially faces more than 1,100 years in prison — even more if convicted of the less serious crimes.

    Michael J. De Palma, Special Agent in Charge of the Internal Revenue Service Criminal Investigation Division, said law enforcement is prepared to “follow the money” to reverse-engineer Ponzi schemes.

    “Financial Fraud and money laundering are not victimless crimes,” De Palma said. “IRS-Criminal Investigation is united with the rest of the law enforcement community in our resolve to disrupt those who commit crimes against our local citizens. Special Agents of IRS Criminal Investigations are expert financial investigators who ‘follow the money’ trail to identify potential offenders.”

    Read the Pizzolato indictment.

    See video on WWL-TV: