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Tuesday
Sep272011

Hawaii Man Convicted of $13 Million Ponzi Scheme

A federal jury convicted a Hawaii man of orchestrating a Ponzi scheme that bilked investors out of at least $13 million.  David E. Ruskjer, 60, was found guilty on a multitude of offenses, including 22 counts of money laundering, 12 counts of mail fraud, and four counts of wire fraud.  He is scheduled to be sentenced in January, where he will face a sentencing recommendation that will likely equal a life sentence given the number of offenses for which he was convicted.  

From September 2004 to December 2008, Ruskjer operated Ruskjer & Associates and "Dave’s Investment/Loan Program", purporting to offer securities to investors in the form of promissory notes.  In return, investors were promised fixed monthly interest rates of 3% to 5%, equating to a non-compounded annual interest rate of 36% to 50%.  Investors were told that Ruskjer had developed a lucrative strategy selling call options that emphasized safety of the underlying principal investment.  Ruskjer represented that he personally was making returns of 5% to 5.5% per month, and was using these profits to pay investor returns.  In total, Ruskjer raised approximately $16 million from 140 investors.  However, Ruskjer used only half of the total funds for investment-related activities, and instead of profiting, lost nearly $3 million.  The remainder of funds were used to pay returns to existing investors and to pay personal expenses.  Ruskjer was charged in a 47-count indictment unsealed in June 2009.  

In a separate action filed in May 2009 by the Securities and Exchange Commission, Ruskjer was charged with multiple violations of federal securities laws, including the failure to any of the note offerings with the Securities and Exchange Commission in violation of the Securities Act of 1933.

A copy of the SEC Complaint is here.

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