Bloomfield Hills Resident Convicted in Multi-Million-Dollar Lender Ponzi Scheme

Raymond Frank Joseph, 55, of Bloomfield Hills, was convicted of three counts of wire fraud, nine counts of interstate transportation of stolen money or property, and 24 counts of conducting monetary transactions in criminally derived property, announced Terrence Berg, United States Attorney for the Eastern District of Michigan.

Mr. Berg was joined in the announcement by Special Agent in Charge Maurice Aouate, Internal Revenue Service Criminal Investigation Division and Special Agent in Charge Andrew Arena, Federal Bureau of Investigation.

A federal jury found Raymond Frank Joseph guilty of all 36 counts following a two-week jury trial in Detroit before United States District Court Chief Judge Gerald E. Rosen. After the verdict, the Court revoked bond and remanded the defendant to custody pending sentencing on March 22, 2010.

According to the indictment, from 2002 through 2007, Joseph solicited loans of money from several individuals to invest in a number of business ventures. To induce the lenders to give him their money, Joseph fraudulently promised the victims a specific date of repayment with interest resulting from his claimed business investment of the money. When Joseph received the lenders’ money, he did not invest it as he had earlier represented but instead used the loaned money: (1) to repay, in a manner characteristic of a “Ponzi” scheme, other individuals who had earlier loaned Joseph money; and (2) to fund Joseph’s own personal expenses, including his credit card bills, household expenditures, and vehicle costs. As a result of his fraudulent acts, Joseph obtained approximately five million dollars which he failed to repay his lenders.

United States Attorney Terrence Berg said, “Investors or lenders should be wary of unreasonably high promises of massive profits. Ponzi schemes prey on the expectations of big returns, and use the next person’s money to pay previous investors. In this case, the jury saw through the defendant’s fraudulent scheme.”

Special Agent Aouate stated, “Although the economics of ponzi schemes are simple, today's swindlers artfully conceal their greed with sophisticated marketing and numerous misrepresentations. Beware, for if is sounds too good to be true, it probably is."

Special Agent Arena stated, "Investors generally understand that there's a correlation between risk and reward, and Ponzi scheme cases like this one reinforce the fact that investing money is inherently risky. Before handing hard-earned money to investors, individuals should know who they are dealing with and how their money will be invested. In light of recent large scale Ponzi schemes, public awareness is at the forefront. The FBI and its partners will aggressively investigate people who swindle money from others, whether it involves hundreds of thousands or millions of dollars."

Wire fraud carries a maximum penalty of 20 years' imprisonment and a $250,000 fine. Interstate transportation of stolen money or property carries a maximum penalty of 10 years' imprisonment and a $250,000 fine. Conducting monetary transactions in criminally derived property carries a maximum penalty of 10' years imprisonment and a fine of $250,000 or not more than twice the amount of the criminally derived property involved.

A sentencing date has been set for March 22, 2010 at 11 a.m. before Judge Rosen.

United States Attorney Berg thanked the IRS Criminal Investigation Division and the FBI for their investigation of the case. The case was prosecuted by Assistant United States Attorney Paul Burakoff.