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California Man Pleads Guilty in $80M Ponzi Fraud

Monday, February 4, 2013

A California man pleaded guilty Feb. 1 in the U.S. District Court the Eastern District of California to charges stemming from his alleged role in an investment fraud scheme that collected at least $80 million from more than 300 people (United States v. Vassallo, E.D. Cal., No. CR-_, 2/1/13).

As recounted by U.S. Attorney Benjamin Wagner, defendant Anthony Vassallo and others operated hedge fund investment company Equity Investment, Management and Trading Inc. between April 2006 and March 2009. The firm purported to use a program designed by Vassallo to time the stock market, and Vassallo allegedly promised investors an annual return of 36 percent with little risk.

In reality, according to the government, Vassallo and others were operating a Ponzi scheme, using the assets of new investors to pay “profits” to existing clients. They also allegedly used investor funds for personal reasons.

Vassallo allegedly lost all of the investors' funds by September 2007, but used phony account statements and other misrepresentations to convince clients not to seek return of their money.

He is scheduled to be sentenced May 3 and could receive up to 20 years in prison and millions of dollars in fines.

Meanwhile, the Securities and Exchange Commission brought a civil securities fraud suit against Vassallo and another man in 2009 in which it obtained injunctive relief (46 SLD, 3/12/09)

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