Maryland Man Indicted on Wire Fraud, Securities Fraud, and Other Charges for His Role in a Ponzi Scheme
Scam Involved Nearly $25 Million in Losses
|U.S. Attorney’s Office February 28, 2013|
WASHINGTON—Garfield M. Taylor, 54, of Rockville, Maryland, has been indicted on wire fraud, securities fraud, and other charges stemming from a Ponzi scheme that resulted in investors losing nearly $25 million that they invested with Taylor and companies he controlled.
The indictment, returned by a grand jury in the U.S. District Court for the District of Columbia, was announced by U.S. Attorney Ronald C. Machen, Jr. and Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office.
Taylor was arrested today and pled not guilty at his arraignment. The indictment was returned February 21, 2013, and unsealed today. Taylor was indicted on seven counts, including charges of wire fraud, securities fraud, and the unlawful sale of unregistered securities. The indictment includes a forfeiture allegation calling for Taylor to forfeit proceeds from the crimes.
According to the indictment, Taylor devised and employed a scheme from in or about September 2006 through in or about September 2010 in which he convinced investors to invest with him by promising them substantial returns on their investment, telling them that he used a sophisticated securities trading strategy that protected against loss, and claiming that he had a proven track record of using this strategy effectively.
During the course of this scheme, however, Taylor never used the trading strategy that he told investors that he would use. With the investments he did make during this period, Taylor either lost money or made minimal profits far below what was needed to pay the amounts he owed. The only way that Taylor was able to pay the substantial interest rates he was paying during this period was to use portions of the principal invested by new investors to pay amounts that were owed to earlier investors.
In one example cited in the indictment, in or about April 2010, Taylor used approximately half of an investor’s $425,000 investment to pay interest and principal that was due to earlier investors, rather than using those funds to invest in securities, as he had promised to do. Taylor paid only a portion of the interest payments he was required to pay the investor, before telling the investor that, because of trading losses, he was unable to make any more interest payments or to return the investor’s principal.
The indictment further alleges that in the course of trying to convince investors to invest with him, Taylor told certain investors that amounts invested with him were insured against loss and that Taylor maintained an account with reserve funds to offset any losses to investors should Taylor actually lose their investment through bad investment decisions. But neither insurance nor an account to reimburse Taylor’s investors existed.
At the time of the scheme’s collapse, Taylor owed investors nearly $25 million just to cover the principal he was contractually required to return to them.
An indictment is merely a formal charge that a defendant has committed a violation of criminal laws and is not evidence of guilt. Every defendant is presumed innocent until, and unless, proven guilty.
This case is being investigated by the FBI’s Washington Field Office. It is being prosecuted by Assistant U.S. Attorneys Matt Graves, Lionel André and Catherine K. Connelly, with assistance from Litigation Technology Specialist Joseph Calvarese and Paralegal Specialists Tasha Harris and Lenisse Edloe.