A Utah man will serve time in both federal and state prison for operating a Ponzi scheme that took in more than $21 million from at least 50 victims. Arvin Lee Black II, known as Lee Black, received a 63-month sentence recommended by prosecutors from U.S. District Judge Robert Shelby after previously pleading guilty to one count each of wire fraud and money laundering. Black could have faced up to 30 years in prison had he been sentenced to the maximum term for each charge. In addition to the federal prison sentence, Black also previously pleaded guilty to charges brought by Arizona authorities. Black was also ordered to pay approximately $13.8 million in restitution to victims.
Black owned and operated Sole Group LLC ("Sole Group"), which advertised itself as a highly-successful stock day trading company that could pay 5% monthly returns to potential investors. In addition to the sky-high returns, investors were also assured that their funds had minimal risk exposure. Based on these promises, Black and Sole Group raised at least $21 million from approximately 50 investors from 2007 to 2012.
However, authorities alleged that the extraordinary returns promised by Sole Group were possible only through the continuous flow of funds from new investors - a classic hallmark of a Ponzi scheme. Indeed, Black was accused of using more than $7 million in investor monies to fund the promised interest payments. Black also used a portion of investor funds for his own personal use. He was charged by both state and federal authorities with various fraud charges, and later pleaded guilty to all charges in February 2014. Arizona authorities also charged Black's wife, a Sole Group sales rep, and the Sole Group CFO.
Black will first serve a 30-day prison sentence related to the Arizona criminal charges before he is due to report on July 1 to begin serving his sentence.