Federal authorities indicted a Long Island woman for allegedly operating a Ponzi scheme that defrauded investors out of millions of dollars. Laurie Schneider, 37, of Oceanside, New York, was charged with three counts of wire fraud. Each count of wire fraud carries a maximum prison sentence of twenty years, along with criminal monetary penalties.
According to the indictment, Schneider operated several businesses, including Janitorial Close-Out City Corporation. ("Janitorial Close-Out"). Investors were told that Janitorial Close-Out invested in industrial equipment and machinery produced by Chinese companies. In soliciting investments in Janitorial Close-Out, Schneider represented that the company was able to purchase and re-sell janitorial equipment and machinery at a profit margin of 15% to 60% over a short-time period. It was these high profits margins, according to Schneider, that allowed her to pay annual interest payments to investors ranging up to 60%. In total, authorities estimate that Schneider solicited investments in Janitorial Close-Out of over $4 million from over 25 individuals. Additionally, Schneider also allegedly operated other related schemes that took in an additional $5 million.
Rather than operate as a legitimate business, prosecutors allege that neither Schneider nor her companies had any connection with any Chinese company. Rather, Janitorial Close-Out and other related companies operated by Schneider were nothing more than Ponzi schemes that pooled investor funds and used these funds as the source of purported interest payments to existing investors. Schneider's lawyer maintains that the business was a legitimate business that simply failed.
Schneider has already been the target of at least one lawsuit by a defrauded investor who alleges losses of over $400,000. Schneider failed to answer the lawsuit, and a default was entered in February 20120. A copy of the default is here.