Orange Resident Admits Operating Multi-Million-Dollar Ponzi Scheme
|U.S. Attorney’s Office February 01, 2012|
David B. Fein, United States Attorney for the District of Connecticut, and Kimberly K. Mertz, Special Agent in Charge of the Federal Bureau of Investigation, announced that GREGORY VIOLA, 59, of Orange, waived his right to indictment and pleaded guilty today before United States District Judge Vanessa L. Bryant in Hartford to two counts of mail fraud stemming from his operation of a Ponzi scheme that defrauded more than 50 investors of a total of more than $2.5 million.
“This defendant stole millions of dollars from more than 50 victim investors,” stated U.S. Attorney Fein. “This case serves as another reminder that the investing public must be rigorous in its due diligence when considering whether and where to place investment and retirement funds. I commend the FBI, the Stamford Police and the Connecticut Department of Banking, all members of our Connecticut Securities, Commodities and Investor Fraud Task Force, for bringing this defendant to justice.”
According to court documents and statements made in court, VIOLA, who was not a licensed investment adviser, operated an investment business in Orange, Conn. From approximately 2007 to July 2011, VIOLA engaged in a scheme to defraud investors who had provided him with investment funds. As part of the scheme, VIOLA used funds obtained from investors to make payments to earlier investors. In order to prevent his investors from becoming aware that he was using new investor funds to make returns to older investors, VIOLA created and mailed fraudulent online account statements that falsely portrayed the value of investment accounts.
As of May 2011, VIOLA falsely represented to victim investors that they had more than $10 million on account. In truth, $10 million in funds did not exist, and the funds that did exist were not fully invested in online trading accounts but were commingled with funds in VIOLA’s own personal bank accounts. In addition to paying earlier investors with invested funds, VIOLA also used invested funds to pay personal expenses, including his mortgage.
When he is sentenced, VIOLA faces a maximum term of imprisonment of 40 years, a maximum fine of more than $5 million, and an order of restitution.
VIOLA was arrested on August 11, 2011.
This matter is being investigated by the Federal Bureau of Investigation with the assistance of the Stamford Police Department and the Connecticut Department of Banking. This case is being prosecuted by Senior Litigation Counsel Richard J. Schechter, with the assistance of Victim-Witness Coordinator, Linda Corraro.
U.S. Attorney Fein and FBI Special Agent in Charge Mertz stated that the investigation is ongoing and asked individuals who believe they may be a victim of this scheme, and have not already been in contact with the FBI, to contact FBI Special Agent Wendy Bowersox at (203) 777-6311.
In December 2010, the U.S. Attorney’s Office and several law enforcement and regulatory partners announced the formation of the Connecticut Securities, Commodities and Investor Fraud Task Force, which is investigating matters relating to insider trading, market manipulation, Ponzi schemes, investor fraud, financial statement fraud, violations of the Foreign Corrupt Practices Act, and embezzlement. The Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service—Criminal Investigation; U.S. Secret Service; U.S. Postal Inspection Service; U.S. Department of Justice’s Criminal Division, Fraud Section and Antitrust Division; U.S. Securities and Exchange Commission (SEC); U.S. Commodity Futures Trading Commission (CFTC); Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Office of the Chief State’s Attorney; State of Connecticut Department of Banking; Greenwich Police Department and Stamford Police Department.
Citizens are encouraged to report any financial fraud schemes by calling, toll free, 855-236-9740, or by sending an e-mail to firstname.lastname@example.org.
This case was brought in coordination with the President’s Financial Fraud Enforcement Task Force, which was established to wage an aggressive and coordinated effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
For more information on the task force, please visit www.StopFraud.gov.