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United States Attorney's Office District of Connecticut
Press Release

     
June 15, 2005

BRANFORD MAN PLEADS GUILTY, ADMITS RUNNING MULTI-MILLION DOLLAR PONZI SCHEME

Kevin J. O’Connor, United States Attorney for the District of Connecticut, announced that DALE L. GRAYBILL, age 60, formerly of 48 Piscitello Drive, Branford, Connecticut, waived indictment and pleaded guilty today to federal charges related to his operating a multi-million dollar Ponzi scheme in which he solicited investments purportedly for offshore high-yield bank debenture “trading programs,” but were, in reality, fictitious investment programs. GRAYBILL’s pleas of guilty to one count of mail fraud and one count of making and subscribing a false 2002 tax return were accepted by Senior United States District Judge Peter C. Dorsey in New Haven.

According to documents filed with the Court and statements made in court, GRAYBILL falsely represented to investors that he had special access to exclusive, government-backed trading programs that were originally opened only to the very wealthy, but which he could make available to them. GRAYBILL held meetings at his residence in Branford, Connecticut, and solicited potential investors to invest in “trading programs.” GRAYBILL told investors that he would place their investment funds in safe, exclusive, off-shore, high-yield bank debenture “trading programs” that would produce greater than market rates of returns of up to 25 percent per month at little or no risk. GRAYBILL further told investors that their funds would be used to facilitate the purchase and sale of newly issued currency and fresh-cut bank debentures at a discount, and that the financial instruments would be sold at a substantial profit, which would generate high returns. GRAYBILL told investors that their principal was secured by United States Treasury Bills.

After receiving the funds from investors, GRAYBILL would divert the funds for his own personal use and benefit, including paying business expenses, and making lulling payments to investors to create the appearance that the investments were safe, secure, and had been invested as promised. During the life of the scheme, GRAYBILL’s investors provided millions of dollars to be invested in the so-called “trading programs.”

“This extensive Ponzi-scheme has left many Connecticut investor-victims with significant financial losses,” U.S. Attorney O’Connor stated. “This Office, through our Securities and Investor Fraud Unit, is committed to prosecuting vigorously those who run these types of scams and prey upon investors.”

The mail fraud charge stems from GRAYBILL’s receipt of a check in the amount of $398,910 in June 2002. The source of the funds for the check were monies that had been “invested” and were intended to be distributed back to the victim investors. GRAYBILL did not return the funds, but instead used the funds to pay his own personal expenses, including credit card bills, gambling expenses, and checks to cash. The false tax return charge stems from GRAYBILL’s using the proceeds from the Ponzi scheme without declaring the funds as income, which caused a tax loss to the U.S. Treasury of over $93,000. In pleading guilty, GRAYBILL has agreed to pay to the Internal Revenue Service tax liabilities, deficiencies and related penalties for the tax year 2002.

Judge Dorsey has scheduled sentencing for September 9, 2005, at which time GRAYBILL faces a maximum term of imprisonment of eight years and a fine of up to $350,000. GRAYBILL also has agreed to forfeit both cash and real estate purchased with the fraudulently obtained funds, totaling more than $300,000.

This case was investigated by the Federal Bureau of Investigation and Internal Revenue Service - Criminal Investigation. The case is being prosecuted by Assistant United States Attorney Michael S. McGarry of the United States Attorney’s Office Securities and Investor Fraud Unit.

 

CONTACT:

 

U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722
thomas.carson@usdoj.gov

 

 

 

 

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