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Entries in restitution (3)

Tuesday
Apr232013

Wisconsin Man Who Duped Father and Brother in $5.3 Million Ponzi Scheme Ordered to Pay $5 Million in Penalties

The U.S. Commodity Futures Trading Commission announced it had obtained an order requiring a Wisconsin man to pay restitution and a fine exceeding $5 million for operating a Ponzi scheme that counted his own family among the victims.  Eric N. Schmickle, 37, was ordered to pay the penalties as part of a CFTC enforcement action that accused Schmickle of operating a commodity-based Ponzi scheme that raised more than $5 million from investors.  Schmickle was also criminally charged in connection with the scheme, and was sentenced to a three-year term last month. 

According to authorities, Schmickle promised to trade commodity futures contracts through his companies, Q Wealth Management and Aquinas.  Friends and family members, including Schmickle's father and brother, gave him $300,000 to start in 2009, with the understanding that Schmickle would be entitled to 25% of any investment profits.  Schmickle promised investors he would achieve substantial gains, which attracted additional investors that subsequently contributed over $4 million.  However, these promises of lucrative gains were untrue, and Schmickle was far from the successful trader he claimed to be.  In fact, rather than 25% gains, Schmickle instead racked up trading losses that exceeded $3 million.  Schmickle also misappropriated investor funds for his own personal expenses, and only several thousand dollars remained when the scheme was uncovered.

Schmickle plead guilty to a single count of wire fraud in July 2012, and his plea agreement called for him to pay approximately $3 million in restitution to victims.  While federal sentencing guidelines called for a sentence ranging from 57 to 71 months, the federal judge tasked with sentencing Schmickle chose to make a downward departure from the recommendation.  

Monday
Sep102012

Man Who Operated Charity As Ponzi Scheme Sentenced to Eight Years in Prison

A federal judge handed down an eight-year prison term to a man who duped investors out of millions of dollars in a Ponzi scheme that masqueraded as a charitable organization.  Joseph Angelo Sivigliano, 80, received the sentence from United States District Judge David Russell after a federal jury convicted Sivigliano earlier this year of forty-six criminal charges that included conspiracy, wire fraud, and money laundering.  While investors were told that investment proceeds would be used to benefit philanthropic ventures, in reality, Sivigliano operated an elaborate Ponzi scheme that ultimately took in nearly $4 million from investors.  Sivigliano was also ordered to pay more than $2.21 million to victims as restitution.

According to authorities, Sivigliano operated Helping Hearts and Hands ("HHH"), based in Bethany, Oklahoma.  Potential investors were assured that HHH was a 501(c)(3) charitable organization, and that profits earned from investments in real estate ventures would be used for humanitarian ventures such as the support of a Christian childcare facility known as "Teaching Little Hearts and Hands."  Aided by co-conspirators Dwight Pimson and Venus Marie Pimson, nearly 70 investors eventually entrusted $3.8 million to the operation.

However, rather than use investor funds to operate his "charity", prosecutors accused Sivigliano of operating a classic Ponzi scheme in which new money was used to pay returns to existing investors.  Additionally, investor funds were siphoned off for a variety of unauthorized purposes, including propping up several Sivigliano-owned businesses including Celebrity Limo and Valet and MC Productions, Inc.  Unbeknownst to investors, Sivigliano also failed to register himself and HHH  with Oklahoma securities regulators.  Victims were estimated to sustain total losses of approximately $1.7 million in the scheme.

Both Dwight and Venue Pimson agreed to plead guilty and cooperated with prosecutors in the case against Sivigliano.  Dwight Pimson later received a five-year prison term, while Venus Pimson was sentenced to a thirty-month term.  Each was also ordered to pay more than $2 million in restitution to victims.  

Tuesday
Jun282011

Colorado Man Pleads Guilty to $1.7 Million Ponzi Scheme

A Colorado man has pled guilty to defrauding at least 79 investors as part of a Ponzi scheme that netted at least $1.7 million.  Frederick H.K. Baker, 46, pled guilty Tuesday to one count of wire fraud and one count of conspiracy to commit wire fraud in connection with a purported sophisticated currency trading operation that was ultimately revealed to be a Ponzi scheme.

Baker admitted that he began soliciting investors in 2006 and 2007 from Colorado and several other states.  Promising investors a monthly return of at least 8 percent, Baker also guaranteed investors that the principal would remain safe.  Yet, instead of using actual profits, Baker used funds from incoming investors to pay older investors.  Prosecutors alleged that investor funds were used to pay for off-road vehicles, a down payment on a Durango, CO house, and work done on personal automobiles.  

As part of Baker's sentence, he was also ordered to pay $820,000 in restitution to the victims defrauded by the scheme.  He is currently scheduled to be sentenced on October 7th in a Denver federal court. Under current federal sentencing guidelines, Baker faces a sentence between 41 and 51 months in prison.  Another individual charged in the scheme, Mark Akins, is still awaiting trial after pleading not guilty earlier this year.