In what is being touted as one of the largest investment scams in Boston since Charles Ponzi's infamous scheme nearly 100 years ago, Massachusetts authorities unveiled additional charges against a husband, wife, and previously-uncharged son for orchestrating a massive Ponzi scheme that allegedly bilked investors out of more than $10 million. A Suffolk County grand jury returned indictments charging Steven Palladino, 56, his wife Lori Palladino, and their son Gregory Palladino each with one count of larceny over $250 and larceny over $250 from a person over 60. The three were also charged with conspiracy to commit larceny, with Gregory Palladino facing an additional three counts of usury and one count of tampering with evidence. If convicted of all counts, the three could face decades in prison.
The trio were the sole principals of Viking Financial Group ("Viking"), which advertised itself to investors as a high-yield, low-risk investment strategy made possible through the successful practice of making secured loans to borrowers at high interest rates. These purportedly profitable loans allowed Viking to pay an above-average return to investors while still pocketing the difference for a healthy profit. Based on these representations, Viking took in more than $10 million from at least 40 victims.
However, in reality Viking made very few loans, and of these loans, many were made in violation of a state statute prohibiting loan interest rates exceeding 20%. Indeed, three of the loans extended in 2007 and 2008 carried interest rates exceeding 60% - which would later serve as the basis for three usury charges against Steven Palladino. The majority of investor funds served only to support a lavish lifestyle for the Palladinos that included Bahamas trips, rent for Steven Palladino's mistress, and hundreds of thousands of dollars in gambling losses. Additionally, nearly $400,000 in investor funds were used to satisfy a condition of Steven Palladino's probation stemming from a 2007 conviction for, ironically enough, defrauding an elderly relative.
The new charges come just after Steven Palladino was arrested on new charges that he had been pressuring a Viking investor for repayment of a loan carrying a 40% annual return - double the maximum rate of return allowed under Massachusetts law. Palladino was arrested after the woman contacted authorities, and was later apprehended at a local gas station with nearly $5,000 in cash in his pockets and driving a $100,000+ Mercedes.
The three will be arraigned September 30, 2013.