A Cincinnati man has agreed to plead guilty to criminal charges that he masterminded a massive Ponzi scheme that took in at least $100 million from investors. Glen Galemmo agreed to plead guilty to one count of money laundering and one count of wire fraud according to documents filed by federal prosecutors. Each count carries a potential maximum prison sentence of twenty years, as well as a monetary penalty. Galemmo's attorneys are seeking a sentence of 8 - 10 years, while prosecutors are seeking a lengthier term of 12.5 to 15 years.
Galemmo operated Queen City Investment Fund ("Queen City"), along with a dozen other investment entities. Touting himself as an experienced trader, Galemmo promised lucrative returns to potential investors through investments in stocks, bonds, futures, and commodities. Investors were provided with promotional materials indicating Queen City had enjoyed a streak of consistently above-average returns, including a return of nearly 20% in 2008 when the S&P 500 experienced a -38.49% loss. Potential investors were assured that Galemmo obtained annual audits of Queen City, and were provided with monthly statements showing steady returns. In total, Galemmo raised at least $100 million from individuals, trusts, and even charitable organizations.
However, Galemmo's touted prowess as a savvy trader was pure fiction. Galemmo was able to pay the promised outsized rates of return not through trading stocks and bonds, but from using incoming investor funds to pay existing investors - a classic sign of a Ponzi scheme. Nor was the Queen Fund audited; rather, Galemmo simply listed the name of an audit firm that had not had a relationship with Galemmo or his fund since 2003. Galemmo also created fictitious trading and account statements that were distributed to investors. Investor funds were diverted by Galemmo for a variety of unauthorized uses, including the purchase of real estate, the payment of fictional interest and principal distributions, and even to operate other businesses such as entertainment complexes.
As outlined in the criminal charging document, authorities are also seeking forfeiture of Galemmo's assets traceable to the fraud, including more than $1.7 million from bank accounts, the fund's former office building, two homes in Cincinnati and Florida, and five automobiles.
A copy of the criminal charging document is below: