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December 18, 2014

Houston Investment Manager Sentenced to 56 Months in Prison for Orchestrating $72 Million Ponzi Scheme

WASHINGTON—A Houston investment manager was sentenced yesterday to serve 56 months in prison for orchestrating a $72 million investment fraud scheme resulting in approximately $40 million in losses to investors.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Carlie Christensen of the District of Utah, Special Agent in Charge Mary Rook of the FBI’s Salt Lake City Field Office and Special Agent in Charge John Collins of the Internal Revenue Service-Criminal Investigation’s (IRS-CI) Las Vegas Field Office made the announcement.

Robert Andres, 63, of Houston, Texas, pleaded guilty on Aug. 22, 2013, to wire fraud. In addition to the prison sentence, U.S. District Judge Robert J. Shelby of the District of Utah ordered Andres to pay more than $3.2 million in restitution.

According to admissions made in connection with his guilty plea, between October 2005 and 2011, Andres recruited investors for Winsome Investment Trust, where he served as the sole manager, attorney and trustee, by misrepresenting Winsome’s assets, asset allocation and the manner in which investor funds were invested. Indeed, between October 2005 and April 2007, Andres raised more than $39 million by disseminating false and misleading balance sheets and representing that he would invest all of the investors’ funds in a trading program or mostly automated trading business.

Also according to Andres’ admissions, he intentionally failed to disclose to potential investors that their money would actually be used to pay earlier investors. In addition, Andres used new investor funds to make purported “profit” payments to earlier investors to create the false impression that Winsome was profitable. During this period, Andres also misappropriated approximately $2.2 million in investor money for personal use, including to pay his hotel bills and living expenses.

This case was investigated by the FBI’s Salt Lake City Field Office and IRS-CI’s Las Vegas Field Office. The Commodity Futures Trading Commission and the Securities and Exchange Commission also provided assistance in the investigation. The case is being prosecuted by Trial Attorney Thomas B.W. Hall of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Jason R. Burt and Mark Y. Hirata of the District of Utah.

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