New York Woman Pleads Guilty To $6.9 Million Ponzi Scheme

A New York woman entered a guilty plea to charges that she masterminded two Ponzi schemes - one purporting to dabble in overseas machinery and another touting real estate - that collectively scammed investors out of nearly $7 million.  Laurie Schneider pleaded guilty to a single charge of wire fraud before U.S. District Judge Dennis R. Hurley.  As part of the plea agreement with prosecutors, Schneider also agreed to the entry of a $1 million judgment against her.  Schneider was indicted in February 2012 on three counts of wire fraud.

Beginning in September 2006, Schneider began soliciting investors for 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, and 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 of up to 60%.  In total, authorities estimate that Schneider solicited investments in Janitorial Close-Out of over $4 million from over 25 individuals.  

In another venture, Schneider operated Eager Beaver Realty LLC ("Eager Beaver"), which purported to buy and re-sell real estate on Long Island at a discount or that were on the verge of foreclosure.  Potential investors were promised annual returns of up to 20%, and received written paperwork indicating that all of their investment would be used to buy and sell real estate.  Investors entrusted nearly $5 million to Schneider and Eager Beaver.

In reality, the healthy returns promised by Schneider were made possible through the operation of a classic Ponzi scheme in which incoming investor funds were used to pay returns to existing investors.  Schneider also formed the Eager Beaver scheme to establish a new source of funds to pay returns to investors in Janitorial Close-Out.  Investor funds were also diverted for Schneider's personal expenses, which included  luxury car purchases and country club dues.

A sentencing date has not yet been scheduled.  Wire fraud carries a potential sentence of up to twenty years in prison.