Preet Bharara, the United States Attorney for the Southern District of New York, announced today that SETH BEOKU BETTS, a principal of Betts and Gambles Global Equities LLC (“Betts and Gambles”), was sentenced today to 51 months in prison by the Honorable Shira A. Scheindlin in connection with his role in a scheme to defraud a public university in the Midwest of more than $8 million. BETTS solicited money from the University for the purposes of trading in collateralized mortgage obligations (CMOs). He then misappropriated the funds, including at least $2 million to purchase luxury automobiles and a personal residence in Florida. BETTS previously pled guilty to committing securities fraud before Magistrate Judge Gabriel W. Gorenstein on February 18, 2014.

Manhattan U.S. Attorney Preet Bharara said, “Seth Betts purported to invest more than $8 million of a public university’s money in mortgage-backed securities. Instead, he invested the university’s money in his own extravagant lifestyle, including luxury Italian automobiles and a beachfront Florida residence. With today’s sentence, Betts will trade in his life of luxury for life in a federal prison.”

According to a complaint filed in Manhattan federal court, the defendant’s guilty plea, and sentencing:

Between July 2008 and December 2008, BETTS presented himself to the University as a principal of Betts and Gambles. In that capacity, he solicited the university’s investment in CMOs, which he claimed he would then sell to third-party buyers in short order at predicted profits. CMOs are fixed income mortgage-backed securities, in which Betts claimed he had expertise. As a result of his solicitation, the university invested approximately $8.165 million dollars of the university’s money with BETTS. BETTS never delivered any CMOs to the university or returned any funds prior to his arrest. Instead, he converted millions of dollars to his own use to purchase beachfront property, pay personal expenses, and buy multiple high-end automobiles, including a Ferrari and a Maserati.

In addition the prison term, BETTS, 38, of Boynton Beach, Florida, was sentenced to three years of supervised release. He was also ordered to pay $8,165,000 in forfeiture and restitution and a $100 special assessment fee.

Mr. Bharara praised the work of the criminal investigators of the United States Attorney’s Office and the Federal Bureau of Investigation, which jointly investigated this case.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Michael A. Levy and Telemachus P. Kasulis are in charge of the prosecution.