Indianola Man Sentenced for Wire Fraud, Being Felon in Possession of a Firearm

DES MOINES, IA—On May 18, 2009, Nicholas Palazzo, 52, of Indianola, Iowa, was sentenced to a term of 65 months’ imprisonment for wire fraud, felon in possession of a firearm, and violation of supervised release from an earlier felony conviction, announced U.S. Attorney Matthew G. Whitaker. Chief United States District Court Judge Robert W. Pratt also ordered Palazzo to serve a three year term of supervised release upon his release from prison, pay an assessment of $200 to the Crime Victim Fund, and pay $529,272 in restitution.

Between approximately August of 2007 and January of 2008, Palazzo devised a fraudulent investment scheme promising abnormally high returns on investments. The investments were then not made and were used instead by Palazzo for personal purposes. The scheme, was perpetrated by paying initial investors limited funds with the money obtained from subsequent investors in what is commonly known as a “Ponzi Scheme”. The wire fraud involved the use of text messaging that signaled through a Verizon switch in Colorado. 25 victims to this “Ponzi Scheme” were identifed during the Palazzo’s sentencing proceedings this morning.

The Felon in Possession of a Firearm charge was based on his possession of a Remington 870 .12 gauge shotgun in December of 2007, after having been previously convicted of a felony.

Palazzo pled guilty to the charges and to the violation of his supervised release at today’s court appearance and sentencing.

This case was investigated by the Federal Bureau of Investigation and the Indianola Police Department. The case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.