Man Who Ran Multi-Million-Dollar Investment Fraud Scheme Sentenced to More Than Eight Years in Prison
|U.S. Attorney’s Office July 09, 2013|
Deirdre M. Daly, Acting United States Attorney for the District of Connecticut, and Kimberly K. Mertz, Special Agent in Charge of the Federal Bureau of Investigation, announced that Garrett L. Denniston, 63, formerly of Sandy Hook, Connecticut, and Boothbay Harbor, Maine, was sentenced today by United States District Judge Janet Bond Arterton in New Haven 97 months of imprisonment, followed by three years of supervised release, for operating a multi-million-dollar investment fraud scheme.
“This lengthy prison term is appropriate for an individual whose long-running scheme defrauded at least 50 victims, including close friends and family, of more than three million dollars,” stated Acting U.S. Attorney Daly. “Many investors were financially ruined. The investing public is urged to steer clear of similar ‘preferred’ investment deals, promises of risk-free investments and guarantees of a high rate of return.”
“Hopefully, today’s sentence will act as a deterrent to everyone who works in the investment world,” stated FBI Special Agent in Charge Mertz. “Those who handle investors’ money must always act in the best interests of clients and never to enrich themselves. Unfortunately, the defendant’s many victims suffered losses perhaps even more profound than those measured in dollars and cents.”
According to court documents and statements made in court, from approximately 2005 to 2012, Denniston defrauded individuals through a Connecticut company called ConsensusOne LLC, by holding himself out to potential investors as operating a successful investment business specializing in mergers and acquisitions and by convincing individuals to make investments in phony stock options or other similarly non-existent investments. During the scheme, Denniston told investors that their money would be used to invest in one of the companies that he or his investment business owned and, specifically, that their money would be used to purchase stock options (or promissory notes) convertible into the company’s stock at a substantial discount to the value of the stock on the date of conversion.
Denniston also told investors that the companies were on the verge of being sold or had already been sold in deals that were closing on an accelerated schedule. He further indicated that an investment was refundable if the deal did not close, and that he and his company would guarantee the investments, so that the investments were risk-free. Denniston also told people that the investment was being offered to them as part of a “friends and family” deal pursuant to which he had access to a limited pool of stock options that would yield a guaranteed return on investment.
In reality, Denniston did not invest his victims’ funds in stock options or in any other legitimate investments. Rather, he spent the money on his own personal and business expenses, as well as for other unauthorized uses. Denniston used some money for gifts to family members and spent additional amounts on airfare, hotels, restaurants, country club memberships, golf and ski outings, mortgage and rent payments, cable and telephone bills, furniture, home renovation costs, and other personal living expenses.
Through this investment scheme, Denniston defrauded at least 54 victims out of a total of more than $3 million. Individual investment amounts ranged from a few thousand dollars to nearly $500,000.
Denniston concealed his fraudulent activities by preparing fake legal documents and forging signatures of those documents. At times, Denniston also used one investor’s funds to repay other investors.
Denniston has been detained since his arrest on September 19, 2012. On February 14, 2013, he pleaded guilty to one count of wire fraud.
Judge Arterton ordered Denniston to pay restitution in the amount of $3,048,969.
This matter was investigated by the Federal Bureau of Investigation and the Connecticut Securities, Commodities, and Investor Fraud Task Force, notably, the Greenwich Police Department. The case was prosecuted by Special Assistant United States Attorney Kerry L. Quinn.
The Connecticut Securities, Commodities, and Investor Fraud Task Force investigates 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 firstname.lastname@example.org.
Today’s announcement is part of efforts underway by President’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. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants.
To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.