New York Recidivist Fraudster Sentenced For $31 Million Ponzi Scheme

A New York man with a lengthy criminal history learned he will spend at least the next six years in prison for operating a Ponzi scheme targeting Florida retirees and Orthodox Jews that ultimately defrauded victims out of at least $31 million.  Joseph Greenblatt received a sentence of six-to-eighteen years after previously pleading guilty to charges of Grand Larceny in the First and Second Degrees, Criminal Violation of the Martin Act, Tax Fraud, and other related crimes.  Greenblatt had at least two prior fraud convictions since 1995, and is also awaiting trial on charges that he wrote nearly $2 million in bad checks to investors.

Greenblatt operated Maywood Capital ("Maywood"), which held itself out as a successful real estate investment company.  Beginning in October 1995, Greenblatt solicited investors to invest in Maywood, often placing advertisements in Florida newspapers to target retirees.  Investors were told that their funds would be used to buy, refurbish, and re-sell prime Manhattan real estate, and that each investment was secured by recorded first mortgages.  Ultimately, Greenblatt raised over $31 million from investors.

However, in reality only some of the properties acquired using investor funds were secured by a mortgage.  Additionally, where a mortgage did exist, it was often not a first mortgage and never specified that the investor was the mortgagor, thus rendering those investments unsecured.  Indeed, on several occasions, Maywood had no ownership interest in the subject properties.  In typical Ponzi scheme fashion, Greenblatt misappropriated investor funds for a variety of unauthorized purposes, including personal expenses and the payment of restitution owed in previous fraud convictions.

A simple criminal background check might have raised red flags for investors, who would have discovered that Greenblatt had a lengthy criminal background that included serving time for defrauding the Department of Housing and Urban Development, as well as a 1995 securities fraud conviction.

Two New Jersey attorneys also were implicated in the scheme, with one attorney joining Maywood after being disbarred - for misappropriating client funds.  Peter Vogel, 74, and Joseph Mongelli, 48, both pled guilty to fraud charges for their role in the scheme.  Mongelli received a six-month sentence, while Vogel received probation.  

Comments

[Donna]

A federal Secretary of State Accountability Bill will help curb ponzi schemes by requiring all secretaries of state to simply update their corporation databases annually.

The failure of secretaries of state to update their databases for decades and enforce LLC laws has caused citizens in many states to become victims of fraudulent LLC’s perpetrating Ponzi schemes, mortgage, insurance, automobile and home healthcare fraud, and has forced the IRS CI and FBI to bear the burden of doing work that SOS’s are paid for. in 2010, the Charlotte IRS had to prosecute over 17 fraudulent LLC's in NC alone without help from the NC SOS office. One of the LLC's was manufacturing defective syringes which caused many deaths. NC SOS Elaine Marshall refused to update the NC SOS Database, and the SEC had to file an emergency order against a NC corporation perpertrating a $600 million Ponzi Scheme this year. http://www.forbes.com/sites/jordanmaglich/2012/08/18/feds-halt-alleged-600-million-zeekrewards-ponzi-scheme-how-it-happened-and-whats-next/

Fraudulent LLC's can be easily detected by secretaries of state if they updated their databases annually, and this would help protect consumers and benefit the federal government by helping to reduce the workload of the IRS, FBI and DOJ.