A Connecticut CPA has been indicted on fraud and money laundering charges and accused of stealing at least $1.5 million from investors through an elaborate Ponzi scheme. Joseph A. Castellano, 58, was arrested on April 6th on ten counts of wire fraud, four counts of securities fraud, one count of mail fraud, and three counts of money laundering. Each of the fraud counts carries a maximum 20-year prison term while each money laundering count carries a maximum 10-year prison term. Castellano has since been released on $250,000 bond.
According to the indictment, Castellano was a certified public accountant and the owner of a tax preparation business named Castellano & Company, LLC ("C&C"). While Castellano was responsible for the preparation of tax returns for individuals and entities, he also allegedly began soliciting those clients and others in July 2007 to invest in various ventures through his companies Casbo Investments, Wallingford Investors Limited Partnership, and AIM Realty Investors. Castellano told investors that their funds would be used to either make loans to other clients or provide short-term funding for various business or real estate projects. In return, Catellano promised annual returns ranging from 6% to 8%. Based on these representations, Castellano raised over $1.5 million from at least 10 investors.
However, authorities allege that Castellano did not loan or invest these funds as described. Instead, Castellano is accused of misappropriating investor funds for himself and running a classic Ponzi scheme.