Illinois Man Sentenced to 6 Years in Prison for $5 Million Ponzi Scheme

An Illinois man was sentenced to six years in federal prison for orchestrating a Ponzi scheme that ultimately swindled $5 million from investors.  Scott M. Ross, 42, had pled guilty in March to mail fraud, which carried a maximum potential sentence of 20 years.  Prosecutors had asked United States District Judge William Hibbler for a sentence range of 6 1/2 years to 8 years.

Ross operated Harbor Wealth Management and two subsidiaries that purportedly engaged in the insurance investment business.  Between 2006 and 2009, investors were offered the ability to purchase investments through three investment funds operated by Ross: the Elucido Fund, LP, the Moondoggie Fund, LP, and the Maize Fund LP.  The Elucido Fund supposedly invested in life settlement contracts, while the Moondoggie Fund purported to invest in the stock of Moondoggie Technologies, which was reportedly developing a dual-sided computer monitor.  Over 150 investors invested $5 million in these two funds, which promised returns up to 34 percent annually.  Instead, Ross commingled investor  contributions from the three Funds to pay business expenses, make payments to investors purporting to be interest payments, and pay himself a large salary.  

A court-appointed receiver has recovered and liquidated Ross' business and personal assets, resulting in $2.7 million for distribution to defrauded investors.  In addition to his sentence, Judge Hibbler also ordered Ross to pay restitution of $3,699,834.  Ross is to report to federal prison on October 18, 2011.