Final Member of Ponzi Conspiracy Sentenced
Birgit Mechlenburg to Serve Five Years

CHARLOTTESVILLE, VA—The final member of a 12-member conspiracy that operated a Ponzi scheme and bilked investors on both sides of the Atlantic out of more than $250 million was sentenced this morning in the United State District Court for the Western District of Virginia in Charlottesville.

Birgit “Gitte” Mechlenburg, 63, a Danish citizen who was extradited from Andorra last year to appear in U.S. District Court, pled guilty in September 2010, to one count of conspiracy to commit wire fraud. This morning she was sentenced to five years’ incarceration, the maximum penalty for her conviction, and a punishment agreed to as part of the defendant’s guilty plea. The court’s sentence included an order of restitution to victims, with the precise amount of restitution to be determined at a later date.

“Ms. Mechlenburg and her coconspirators perpetrated one of the largest Ponzi schemes ever seen in this District,” United States Attorney Timothy J. Heaphy said today. “They promised investors unreasonable rates of return, then used the funds obtained through their deceit to enrich themselves. Ms Mechlenburg repeatedly made false promises and took large sums of money from her unsuspecting victims. Today, she was finally held accountable for her despicable fraud. The prison sentence imposed by Judge Moon is appropriate punishment. That sentence, and the significant amount of restitution for victims which we continue to pursue, should serve as reminders to other fraudsters that they will be pursued and punished.”

Mechlenburg has admitted to being part of a Ponzi scheme orchestrated by former Charlottesville resident Terry Dowdell dubbed the “Vavasseur” program. Vavasseur, like so many Ponzi schemes, promised investors extremely high returns on their investment in short periods of time, often leading investors to opt to reinvest their earnings rather than cash out.

Mechlenburg was a top promoter of the program and she found investors to contribute the large amounts of money needed to fuel the ongoing scheme. Between 1998 and 2002, she was personally responsible for bringing approximately $13 million in investor funds into the Vavasseur program. For her role in the fraud, she earned $1.6 million in commissions and fees.

In November 2001, the SEC brought a lawsuit against Vavasseur, Dowdell, and others, freezing approximately $33 million in assets. Following the asset freeze, Mechlenburg left the United States for Europe, and settled in the small country of Andorra.

Following years of tireless work by Special Assistant United States Attorney Steven Levine, an attorney for the Securities and Exchange Commission, and Assistant United States Attorney Jean Hudson, and with the assistance of the FBI Legal Attache, Madrid, Spain, Mechlenburg was finally arrested on the streets of Andorra in 2009, and extradited to the United States in early 2010.

“The prosecution of this conspiracy, and more specifically of Ms. Mechlenburg, is a testament to the cooperative law enforcement of international, federal, state, and local agencies working together for a common goal,” U.S. Attorney Heaphy added. “The convictions in this case are the product of that cooperation. I salute the many agencies and talented investigators who had a hand in bringing this matter to a successful conclusion. Those of us who work in the Western District of Virginia are grateful for all of the assistance we received as this case progressed.”

The investigation of the case was conducted by the Securities and Exchange Commission and the Federal Bureau of Investigation. Assistant United States Attorney Jean Hudson and Special Assistant United States Attorney Steven Levine prosecuted the case for the United States.