A Virginia man received an eight-year prison sentence for operating a Ponzi scheme that ultimately resulted in losses of almost $9 million to investors. Julius Everett Johnson, 62, who had pled guilty earlier this year to conspiracy to commit mail, wire and bank fraud, and engaging in unlawful monetary transactions, faced up to a fifteen-year sentence for the charges. Johnson also must pay a $37 million civil penalty imposed by the Virginia State Corporation Commission
Along with his co-conspirator Walter Reinhart, Johnson operated the scheme using ten area businesses, including Benefit Contract Administrators, MHC Linen Services, River City Cleaners, Roberts Awning, First Fidelity Financial of Richmond, Capital Investor Group, Commonwealth Assurity, Mid Atlantic Insurance Agencies, FIC Financial Group and Livingwell Healthcare of Virginia. From 2005 until October 2009, Johnson used the entities to sell over $11 million in unregistered securities that promised yearly returns of eight to ten percent. Instead, most new investor funds were used to pay interest to other investors and create the appearance of a legitimate operation.
Under the terms of the civil penalty, Johnson can avoid the $37 million penalty if he pays $11 million in restitution to investors by April 2012.