Milton Man Charged with Orchestrating Ponzi Scheme and Rare Coin Fraud
Department of Justice, U.S. Attorney’s Offices Prioritize Investment Fraud
| U.S. Attorney’s Office October 17, 2012 |
BOSTON—A Milton man was charged yesterday with orchestrating a large Ponzi scheme and a massive mail fraud involving rare coins. He was also charged with laundering the proceeds and with obstructing a U.S. Securities and Exchange Commission examination of his securities business.
Arnett L. Waters, 62, was charged with seven counts of securities fraud, six counts of mail fraud, two counts of money laundering, and obstruction of justice.
The information alleges that from 2007 through 2012, Waters obtained no less than $839,000 from various investors by falsely representing that he would invest the money on their behalf. In fact, Waters sold these investors units in sham investment partnerships and spent most of the investors’ funds on personal and business expenses. He lulled investors into a false sense of security by telling them that their investments had generated substantial profits and would be returned to them in the near future.
In April 2012, Waters was interviewed as part of an SEC examination of his securities business. During the interview, Waters falsely told examiners that no one had invested in his investment partnerships.
In addition, between 2002 and 2012, Waters defrauded coin customers and obtained millions of dollars by selling coins at inflated prices. Waters convinced customers to buy coins at prices that, on average, represented a 600 percent mark-up from the market value of the coins. Waters also induced coin purchasers to return coins to him on the false pretense that he would sell those coins on the customers’ behalf. One victim, who had paid Waters over $7 million for coins, was convinced by Waters to pay over half-a-million dollars for fees purportedly related to the sale and storage of the coins. In fact, Waters had already sold most or all of the coins and used the proceeds for his own personal and business expenses.
If convicted, Waters, faces up to 20 years in prison, to be followed by three years of supervised release and a $5 million fine for securities fraud; up to 20 years in prison, to be followed by three years of supervised release and a $250,000 fine for mail fraud; up to 10 years in prison, to be followed by three years of supervised release and a $250,000 fine for money laundering; and up to 20 years in prison, to be followed by three years of supervised release and a $250,000 fine for obstruction of justice.
On October 2, 2012, Waters pleaded guilty to two counts of criminal contempt for willfully violating an asset freeze order entered by the court in a civil case brought against Waters by the SEC.
At that plea hearing, the government told the court that Waters had maintained a hidden bank account in violation of the asset freeze order. From the time the freeze order was entered into in May 2012, through mid-July 2012, Waters deposited approximately $172,000 in proceeds from his mail fraud and dissipated approximately $152,000.
Judge Denise J. Casper has scheduled the sentencing in the criminal contempt case for December 5, 2012.
United States Attorney Carmen M. Ortiz and Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. United States Attorney Ortiz also expressed appreciation for the cooperation of the U.S. Securities and Exchange Commission. The case is being prosecuted by Assistant U.S. Attorney Ryan M. DiSantis of Ortiz’s Economic Crimes Unit.
The details contained in the Information are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
In recent years, the Department of Justice has made the fight against financial fraud—particularly fraud targeting consumers and investors—a top priority. Alongside the DOJ’s Criminal Division, U.S. Attorney’s offices have helped to make meaningful progress in ensuring justice for victims of financial fraud schemes. Since early 2011, roughly 800 defendants have been charged, tried, pled guilty, or sentenced in approximately 500 federal prosecutions involving investor fraud.