by Brian Mahany
Walter Netschi bought and sold thousands of ATM machines. At least that’s what he told investors. Prosecutors say that 90% of those machines were nonexistent or belonged to others. A federal jury in Manhattan convicted Netschi in a scheme that solicited over $80 million from investors.
How did the scheme work?
Netschi claimed that he went around the country purchasing ATM’s and placing them in prime locations. Prosecutors say that most of the money never went to purchase ATM machines, however. Instead the money was used to support his lavish lifestyle and pay off earlier investors.
In some cases, Netschi “sold” ATM’s that he didn’t even own.
As early as 2006 some investors began to get suspicious. One investor went to a hotel where he had purchased an ATM. Of course, he could not find the ATM and was told by the hotel that no such ATM existed.
About the same time, another investor began to get suspicious when records showed “his” ATM was making profits. Unfortunately for Netschi, the investor knew Hurricane Katrina had destroyed the store where the ATM was located.
Like all Ponzi schemes, eventually there simply was not enough new money coming in to pay old investors. The scheme collapsed in 2008. Netschi was indicted in 2009 and found guilty by a jury in November of last year.
At sentencing, Netschi’s lawyer argued that Netschi was a “good man” that frequently purchased groceries for needy people or helped others financially. In the court’s eyes, using stolen money to perform good deeds didn’t account for much.
Prosecutors argued that Netschi’s lies were intentional and that many people were hurt. One retired banker lost his entire retirement savings of $4 million and now waits tables in Florida to make ends meet. Prosecutors also say that Netschi spent $15 million of the money to support his lifestyle, which included a private jet.
Judge Thomas Greisa sentenced Netschi to 8 years, 4 months of prison. With good time he will be eligible for release in about 7 years.
Mahany & Ertl is a boutique law firm that concentrates on financial fraud and asset recovery. Ponzi schemes, investment fraud, or bad advice from a stockbroker? We can help. Call Brian Mahany for a confidential, no obligation consultation. Brian can be reached at (414) 704-6731 (direct) or at
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