by Brian Mahany
A former investment adviser traded his pinstripes for prison stripes last week. Carlo Chiaese of New Jersey was sentenced to 58 months in prison for defrauding a tug boat workers union and other investors in the New York / New Jersey area.
Chiaese solicited investors with promises of safe returns from conservative investments such as mutual funds. Although he raised millions of dollars, prosecutors said none of it was invested in securities. Instead, Chiaese used the money to fund a lavish lifestyle. According to statements made in court, he purchased an Audi Q7, Porsche 911 Carrera and a Land Rover. He also used the money to fund trips to Florida and St. Thomas and buy expensive gifts at Hermes, Salvatore Ferragamo and other high-end retailers. $800,000 reportedly was given to family members.
To conceal his crime, Chiaese paid back early investors and mailed phony statements to others including the union pension fund. Fraudsters will often pay back a few investors so as to have references and testimonials from happy customers.
What makes this case noteworthy is the recent trend of conning investors through promises of safe and conservative returns. In earlier times, Ponzi schemers typically made promises of above market returns. With the present stock market so turbulent, however, many investors are happy to simply not lose money.
With so many Ponzi schemes and other frauds coming to the surface, doing some due diligence is essential before you invest. At a minimum, determine whether there are audited financials or if a well-established broker dealer stands behind the investment.
This case was prosecuted by the new Obama Financial Fraud Enforcement Task Force with assistance from the FBI, SEC and Postal Inspection Service. Unfortunately, the government is only able to prosecute a handful of these scams each year.
If you are the victim of a Ponzi scheme or investment fraud, contact an experienced fraud recovery lawyer. Many securities fraud cases can be handled on a contingent fee basis meaning no legal fees unless you recover.
Mahany & Ertl, LLC – America’s Fraud Lawyers. Offices across the U.S including Michigan, Wisconsin and New England.. Services nationwide.