Orange Resident Charged with Defrauding Investors

David B. Fein, United States Attorney for the District of Connecticut, and Kimberly K. Mertz, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, announced that GREGORY VIOLA, 59, of Orange, was arrested today on a criminal complaint charging him with mail fraud. The charge stems from an alleged scheme to defraud investors of at least hundreds of thousands of dollars via a Ponzi scheme.

According to court documents and statements made in court, VIOLA operated an investment business in Orange. It is alleged that since as early as 2007, VIOLA engaged in a scheme to defraud multiple investors by not investing funds as he had represented. As part of the scheme, it is alleged that VIOLA promised his investors that their funds would be invested, and that they would receive a specified rate of return on the investments as well as the potential for the investment to appreciate. Rather than invest funds provided by investors, it is alleged that VIOLA engaged in a Ponzi scheme in which he used new investor funds to make payments to earlier investors. It is also alleged that VIOLA mailed investors fraudulent statements that falsely represented the amount of funds that the investors had on account.

The criminal complaint specifically alleges that VIOLA provided one investor with a purported E-Trade account statement representing that the investor had in excess of $300,000 on account with VIOLA. Subsequent investigation by law enforcement has revealed that this statement is false, and E-Trade has no record of an account in the investor’s name.

VIOLA voluntarily surrendered himself this afternoon and appeared before United States Magistrate Judge William I. Garfinkel in Bridgeport. He was released on a $100,000 bond, which is secured by two properties.

U.S. Attorney Fein and FBI Special Agent in Charge Mertz noted that the investigation into this alleged scheme is ongoing, and asked individuals who believe they may be a victim of this scheme, or anyone with information related to this scheme, to contact FBI Special Agent Wendy Bowersox at (203) 777-6311.

If convicted, of mail fraud, VIOLA faces a maximum term of imprisonment of 20 years.

U.S. Attorney Fein stressed that a complaint is only a charge and is not evidence of guilt. The defendant is entitled to have this matter presented to a grand jury and, in the event an indictment is returned, he is entitled to a trial at which it will be the Government’s burden to prove guilt beyond a reasonable doubt.

This matter is being investigated by the Federal Bureau of Investigation, with the assistance of the Stamford Police Department. The case is being prosecuted by Senior Litigation Counsel Richard J. Schechter.

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 ctsecuritiesfraud@ic.fbi.gov.