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Monday
Aug082011

Hawaii Couple Sentenced in $4 Million Ponzi Scheme Coordinated Behind Prison Walls

A Hawaii husband and wife were sentenced to federal prison for orchestrating a Ponzi scheme that bilked investors out of nearly $4 million.  Perry Jay Griggs, and his wife, Rachelle Griggs, received sentences of eighty-seven months and four years, respectively, for operating a scheme that authorities say Perry Griggs masterminded while he was incarcerated (incidentally while serving a sentence for an earlier Ponzi scheme).   The couple entered guilty pleas earlier this year to charges of wire and mail fraud.  Each of those charges carried a maximum sentence of twenty years in prison and additional criminal monetary penalties.

From at least 2005 until 2009, prosecutors say the Griggs operated Aloha Ventures, soliciting money from prison inmates and their families who thought they were investing in a commodity pool that purportedly traded commodity futures contracts.  While incarcerated following convictions for wire fraud and money laundering, Perry Griggs approached fellow inmates about the investment opportunity, while his wife solicited investments from the family of inmates and other members of the general public. Potential investors were told that Perry Griggs was a highly successful commodity trader and that they would receive monthly payments composed of trading returns.  In total, it is estimated that seventeen victims placed more than $4 million with Aloha Ventures.  Yet only a fraction of these funds were invested in commodity futures contracts, with authorities alleging that nearly all of these funds were lost.  Additionally, the Griggs misappropriated approximately $1 million for personal uses and $1.1 million to pay fictitious returns to investors.  Upon his release from prison, the Griggs became fugitives until their arrest in December 2010.

In addition to their respective prison sentence, both Perry and Rachelle Griggs were ordered to pay nearly $2 million each in restitution to investors defrauded by the scheme.  

A copy of the complaint filed by the US Commodity Futures Trading Commission is here.

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