Anthony Vassallo charged in $40 million Ponzi scheme

March 21st, 2009 - 11:54 am ICT by admin  

Sacramento, CALIFORNIA (BNO NEWS) — The United States Attorney Office for the Eastern District of California has announced the arrest of Anthony Vassallo from Folsom, California who has been charged for his role in a massive investment fraud scheme which brought in more than $40 million from 150 investors, many of whom he met in church.

The official announcement can be found below.


Leader of Investment Scam Defrauded 150 Investors, Many from His Church

Second Man Charged with Impersonating a Federal Agent and Attempted Extortion

SACRAMENTO, Calif.—Acting United States Attorney Lawrence G. Brown, FBI Special Agent-in-Charge Drew Parenti, and IRS-Criminal Investigation Special-Agent-in-Charge Scott O’Briant announced that ANTHONY VASSALLO, 29, of Folsom, Calif. has been charged for his role in a massive investment fraud scheme that brought in more that $40 million from 150 investors, many of whom he met in church. VASSALLO appeared in federal court this afternoon before United States Magistrate Judge Edmund Brennan.

This case is the product of a joint investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigations. The United States Securities & Exchange Commission assisted with this case.

“It brings no great satisfaction to once again announce charges in another multimillion dollar investment fraud Ponzi scheme perpetrated in our region. These cases involve everyday people bilked out of their life savings. Our commitment is to aggressively pursue offenders such as Anthony Vassallo, hold them accountable, and try to recoup some of the lost funds for the victims,” said Acting U.S. Attorney Brown.

FBI Special Agent-in-Charge Parenti said, “In recent months the sluggish U.S. economy has brought to light many Ponzi schemes that are likely to cause investor losses reaching into the billions of dollars. While the FBI is committed to aggressively investigating those responsible for the fraud, we are also hopeful that the attention afforded these cases will help educate future investors and reinforce the fact that investing money is inherently risky. Before handing over their hard-earned money to a third party, investors are strongly encouraged to know who they are dealing with, and know how their money will be invested. Above all, be skeptical of anyone who guarantees a specific rate of return, particularly one that sounds unusually high. Nowhere is that old adage, `If it sounds too good to be true, it probably is,’ more applicable than here.”

“This was a classic Ponzi scheme,” said IRS Special Agent-in-Charge O’Briant. “Investors were lured by false hopes and empty promises. Individuals who intentionally jeopardize the financial well-being of their clients through the use of fraudulent high-yield investment schemes will be held accountable by our legal system. IRS Criminal Investigation Special Agents will use their financial expertise and continue to combat investor fraud and tax crimes.”

Investment Ponzi Scheme

According to Assistant United States Attorney Robin R. Taylor, who is prosecuting the case, VASSALLO and others operated Equity Investment, Management and Trading Inc. (EIMT) in Folsom, soliciting investors for a “hedge fund” program. He promised investors a rate of return of 3.5 percent per month with little risk of loss.

The criminal complaint alleges that these representations were false and that VASSALLO and others operated EIMT as a vast Ponzi scheme using investor funds to make “dividend” payments to other investors and make risky loans without investor knowledge or consent. Although VASSALLO lost virtually all of the investors’ money, and ceased trading in securities in about September 2007, he lulled investors into keeping their funds on deposit by fabricating investment information and reporting positive returns. Neither VASSALLO nor EIMT was registered with the SEC.

Civil Action

On March 11, 2009, the SEC charged VASSALLO and KENNETH KENITZER, 66, of Pleasanton, California, with the anti-fraud provisions of the federal securities laws for their roles in the fraudulent investment scheme. The SEC obtained a court order against VASSALLO and KENITZER freezing the assets of EIMT. In addition, the SEC seeks injunctive relief, disgorgement of fraud proceeds, and financial penalties. The SEC has frozen $1.2 million found in a bank account controlled by VASSALLO.

Investor Shake-Down Scheme Alleged

On March 18, 2009, MICHAEL DAVID SANDERS, aka David Dennis SANDERS, 41, of Fair Oaks, Calif., was charged with conspiracy, impersonating a federal law enforcement agent, and with attempting to extort monies in connection with recovering funds for EIMT, VASSALLO, and others. The criminal complaint alleges that on March 8, 2009, SANDERS and at least four other individuals met with two businessmen, who had previously invested with VASSALLO, in an office in Folsom. Upon entering the office suite, SANDERS and several others displayed guns and handcuffs on their belts and wore bulletproof vests, radio earpieces, and badges on chains around their necks.

During the meeting, SANDERS and the others with him falsely identified themselves as agents with the FBI, SEC, and the Attorney General and told the businessmen that “you can tell us to leave the office, but if we leave, you are leaving with us in handcuffs.” When asked for their names and law enforcement credentials, SANDERS and the others told the attendees to shut up and not ask questions. During the meeting, one of the individuals working with SANDERS spoke into his earpiece stating that ‟one of the units” was ‟in place” at the one of the businessmen’s personal residence where he lived with his wife and young child. SANDERS and the others told the attendees that they had until noon on Monday, March 9, 2009, to wire $378,300.16 to a bank account at Patelco Credit Union in the name of the ‟Spirit Foundation.” SANDERS threatened the individuals with ‟search and arrest warrants” if they did not comply with the request.

SANDERS appeared in court on March 19, 2009, before United States Magistrate Judge Edmund Brennan. The defendant was released on bond, and a preliminary hearing was set for April 8, 2009, at 2:00 p.m.

Statutory Penalties

If convicted, VASSALLO faces up to 20 years in prison for the mail and wire fraud offenses; up to 20 years for the money laundering offenses; and up to 10 years in prison the securities law violations, with fines up to twice the value of the victims’ losses. SANDERS faces up to five years in prison for the conspiracy, up to three years in prison for impersonating a federal law enforcement agent, and three years for extortion. However, the actual sentence will be dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and will be imposed at the discretion of the court. The charges in the criminal complaints are only allegations and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

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