A Florida man who operated a Ponzi scheme that defrauded investors out of $2 million was sentenced to serve five years in prison. Arthur Strasnick, 64, received the sentence after pleading guilty to two counts of mail fraud and one count of identity theft last September. United States District Judge Thomas McAvoy, sentencing Strasnick in a New York federal court, called Strasnick's actions "less than human" after hearing a victim describe how Strasnick's actions had driven her to nearly commit suicide. In addition to the five-year sentence, Judge McAvoy also ordered Strasnick to serve three years of supervised release, as well as pay nearly $2 million in restitution to his victims.
Strasnick owned and operated Backstreet Associates, based in Ormond Beach, Florida and Saratoga Springs, New York. As President, he solicited potential investors with the lure of guaranteed annual returns ranging from 12% to 20%. Investors were provided with fictitious account statements showing the "growth" of their account. Additionally, Strasnick made periodic interest payments to investors to make it appear that the operation was legitimate. However, as Strasnick admitted, he was operating a classic Ponzi scheme. Rather than make legitimate investments, Strasnick used investor funds to make interest payments to existing investors and for the payment of personal expenses.
However, apparently operating a Ponzi scheme was not enough for Strasnick. At the same time, he was also running a mortgage scam, conning some of the same victims of his Ponzi scheme into signing over their mortgage to him under the agreement he would make all principal and interest payments. Instead, Strasnick obtained a mortgage under the victim's name and then transferred hundreds of thousands of dollars into his personal bank account. The mortgage scam defrauded investors of over $2 million.