A Canadian man who once owned a hockey team in the Ontario Hockey League learned he will spend the next 262 months in federal prison for orchestrating a massive Ponzi scheme that took in at least $130 million from over 1,000 victims. William Wise, 64, was sentenced by U.S. District Judge Edward Chen, who will decide in April how much restitution Wise should be ordered to pay to his victims. Wise pleaded guilty last September to one count of conspiracy to commit mail and wire fraud, twelve counts of mail fraud, three counts of wire fraud, one count of money laundering, and one count of tax evasion. With credit for good behavior, Wise will not be eligible for release until late 2033.
Beginning as early as 1999, Wise offered certificates of deposit (CDs) to potential investors that promised guaranteed annual rates of return of 16%. The CDs were offered by three entities: Millennium Bank, United Trust of Switzerland ("UTS"), and Sterling Bank and Trust ("SBT") (collectively, the "Millennium Entities"). Potential investors were told that the offered rates of return were made possible through overseas investments made by the Millennium Entities. Wise opened offices in Napa, California and Raleigh, North Carolina, where he employed and oversaw salespeople who solicited investors. Ultimately, nearly $130 million was raised from at least 1,200 investors.
However, Wise failed to disclose that he controlled the Millennium Entities, and that the promised rates of return were not from overseas investments but rather from the funds of other investors - a classic hallmark of a Ponzi scheme. In addition to using investor funds to make interest and principal payments, Wise misappropriated a stunning $50 million to support a lavish lifestyle that included:
- a $12,000 weekly allowance for his wife;
- a $6,000 - $10,000 monthly allowance for each of his girlfriends;
- $1 million on fine wine;
- $800,000 to build a hangar in Atlanta for his corporate jet;
- $450,000 for three boats;
- and the purchase of a property in St. Vincent and the Grenadines.
After the Securities and Exchange Commission filed charges and obtained a $75 million judgment against Wise, he was subsequently indicted in February 2012. Wise turned himself in on April 17, 2012, and pleaded guilty in September 2012.
A court-appointed receiver identified over 300 investors that were fortunate enough to profit from their investment with the Millennium Entities, and subsequently filed suit against 200 of those so-called "net winners." Ultimately, the Receiver was able to recover over $2.5 million in "clawback" settlements and judgments.
A copy of the plea agreement is below: