A Harvard-educated former lawyer pled guilty to operating a Ponzi scheme that took in more than $10 million from investors. Robert Tunnell, Jr., 72, entered a guilty plea to one count of mail fraud and one count of wire fraud, each of which carries a maximum prison sentence of twenty years. An indictment handed down in July charged Tunnell with seven counts of mail fraud, thirteen counts of wire fraud, and one count of money laundering. As part of the plea agreement, prosecutors agreed to recommend a 57-month prison sentence.
A Dartmouth and Harvard Law alumnus, Tunnell was an attorney in San Francisco from 1971 to 2001, when he resigned from the California state bar after being charged with stealing approximately $300,000 from his law firm and diverting the funds to his personal trading account. Telling those closest around him - including his girlfriend - that he was a semi-retired international attorney who had successfully traded commodities including coffee and copper, Tunnell promised investors above-average returns while representing that his investment style was low-risk and conservative. Many friends and relatives believed him, and a total of $10 million was given to Tunnell to invest. However, Tunnell did not engage in low-risk trading, and instead lost nearly $7 million in risky commodities trading. The remainder was paid to investors in the form of principal and interest payments, a classic hallmark of a Ponzi scheme.
A sentencing hearing is currently scheduled for February 22, 2012. The sentencing judge will also likely order Tunnell to pay restitution to his victims.