Owner of DJ Harriett, Inc. Sentenced to More than Five Years in Prison for Ponzi Scheme

David J. Harriett was sentenced to 68 months in prison for executing a Ponzi scheme that defrauded approximately 200 people out of about $7 million, Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, announced today.

“These types of financial frauds destroy people’s trust and rob them of their savings,” Dettelbach said. “We will continue working vigorously to ensure free markets are fair markets.”

Harriett, 60, lives in Warren, Ohio, according to court records.

From August 1996 through January 2010, Harriett represented to more than 200 investors that he and his company, DJ Harriet, Inc., were approved “project managers” for the construction of new McDonalds and Pioneer Chicken franchise restaurants in the Northeast Ohio, New York, Indiana, Pennsylvania, and Florida, according to Harriet’s plea.

Harriett solicited investors for DJ Harriett, Inc. and, in exchange for their investment, provided investors with promissory notes that purportedly guaranteed the return of their investment, plus significant interest, according to his plea.

Harriet sent numerous letters through the mail to investors which falsely represented the success and growth of the company as well as the existence and success of franchise construction contracts. Harriett knew that neither he nor DJ Harriett, Inc. had any contracts with McDonalds or Pioneer Chicken, let alone franchise construction contracts. Moreover, Harriett also knew the investor money was not being put to any legitimate use, but rather was being used to make Ponzi payments to other investors, to operate DJ Harriett, Inc. and for Defendant’s own purposes and personal use, according to his plea.

This case was prosecuted by Assistant United States Attorney Bridget M. Brennan after an investigation by the Youngstown Office of the Federal Bureau of Investigation.

This prosecution is sponsored by President Barack Obama’s Financial Fraud Enforcement Task Force.

President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive 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.