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Thursday
Sep152011

Guilty Plea in $1.3 Million Ponzi Scheme

A New York investment adviser admitted this week to orchestrating a Ponzi scheme that robbed family members and friends out of over $1 million.  Timothy J. Geidel, 49, pled guilty Tuesday to a federal count of wire fraud as part of a plea agreement with prosecutors.  While wire fraud carries a maximum prison sentence of twenty years, the U.S. Probation Department will fashion a likely lower range using federal sentencing guidelines.  Geidel also agreed to make $1.3 million in restitution to victims, although Geidel's ability to meet this obligation remains unclear.

Geidel was arrested in November 2010 by the United States Secret Service and charged with wire fraud and money laundering.  Prior to the arrest, Geidel worked at Georgetown Capital Group, Inc. ("Georgetown"), where he worked as an investment adviser.  In his capacity as a registered representative, Geidel first solicit clients to invest at Georgetown.  After winning their trust, Geidel then persuaded those clients to liquidate their accounts with Georgetown and entrust the funds to Geidel, who promised to invest in high-yield investment vehicles.  In total, approximately $1.4 million was collected from 57 victims.  Instead of investing the funds, Geidel misappropriated the funds, using them for personal expenses and to make interest payments to current clients.  

Geidel was recently barred from associating in any capacity with any financial institution per the terms of a settlement with the Financial Industry Regulatory Authority ("FINRA").  Geidel is scheduled to be sentenced in January 2012, where he is expected to receive at least four years in federal prison.

A Copy of Geidel's Agreement with FINRA is here.