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Wednesday
May162012

Two Guilty in $12 Million Ponzi Scheme

A federal jury returned a guilty verdict in the case of two New York residents accused of operating a Ponzi scheme that defrauded 150 investors out of approximately $12 million.  Andrew S. Mackey, 62, and Inger L. Jensen, 54, both of Cedarhurst, New York, were indicted in July 2010 on seventeen charges, including wire fraud, mail fraud, and conspiracy to commit wire fraud and mail fraud.  After deliberating for five hours, the jury convicted the pair of fifteen of the seventeen counts.  Each could receive a maximum of thirty years in prison, along with a fine of up to $1,000,000, for each count of conviction.

From 2003 to 2007, Mackey and Jensen owned and operated ASM Financial Funding Corporation in Valley Stream, New York. Representing themselves as experienced financial experts, they solicited investors promising returns of up to 20% per month.  Mackey and Jensen also employed intermediaries who were paid commissions for steering new investors to the scheme.  The pair solicited investors for ASM's "Wealth Enhancement Club", which collected over $12 million from 150 investors.  These investors were led to believe that they were earning substantial monthly returns through monthly statements and forms filed with the IRS.  However, these documents were fictitious, and in reality, the pair invested less than a third of investor funds.  The remainder was used to make purported interest payments to investors, to pay business expenses, and to sustain a lavish lifestyle.  

As funds began to dwindle in early 2006, investors stopped receiving monthly interest payments.  After the scheme unraveled, Mackey claimed that the scheme should be governed by the laws of Rigo, Latvia, as investors had signed an "Attestation" in which they agreed the scheme would be governed by the laws of Latvia.  

Sentencing is scheduled for August 21, 2012.

A copy of an administrative proceeding by the Securities Commissioner of Maryland is here.

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The capital of Latvia is Riga.

May 18, 2012 | Unregistered CommenterRobert Malveaux

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