littleton man is sentenced to two years in prison for running a ponzi scheme
DENVER – Michael B. Gale, age 66, of Littleton, Colorado, was sentenced today by U.S. District Court Judge Robert E. Blackburn to serve 24 months in federal prison for wire fraud and money laundering the U.S. Attorney’s Office, Internal Revenue Service Criminal Investigation (IRS CI) and the Federal Bureau of Investigation (FBI) announced. Following his prison sentence he was ordered to serve 3 years on supervised release. Gale was also ordered by Judge Blackburn to pay $425,878.71 in restitution to his victims. After the hearing, Gale was released on bond. He will report to a Bureau of Prison facility once one is designated.
Gale was charged by an information on October 22, 2013 and pled guilty on December 19, 2013 to the charges. According to the information and plea agreement, beginning in February 2009 Gale individually and as Capital Management Group ("CMG"), fraudulently solicited and accepted at least $893,346 from nine individuals for the purpose of operating a commodity pool to trade commodity futures contracts on the Pool's behalf. Gale did not register as a commodity pool operator ("CPO") with the Commodity Futures Trading Commission, but held himself out as a CPO to investors. Gale maintained two futures trading account and represented on both accounting documents that the funds on deposit were his and did not belong to any other investors or pools when in fact they were investor funds.
To further the scheme, Gale lied about his past trading successes telling some investors they could expect a 100% return on their investment while telling others that they could not lose on their investment. He also provided investors false documents to encourage them to invest or stay invested. Specifically he provided two investors with false tax documents that falsely represented the investors' profits in the Pool and to another investor he provided a false trading account statement that falsely represented that the value of the pool exceeded 3.5 million dollars. He also sent numerous emails to investors in which he lied about the Pool's profits.
Instead of investing the funds as promised, Gale took the investor funds and commingled them with his personal money and spent some of it on personal expenses. On one occasion, Gale transferred investment funds to his personal bank and subsequently transferred $100,000 of that money to the trading account to make it appear that the funds in that account were his personal money and not investor money. The investments Gale made actually lost money. He sometimes used later investors' funds to make partial payments to previous investors and returned approximately $447,477 to investors during the course of his scheme.
“The prison sentence handed down in this case is appropriate given the defendant’s criminal conduct,” said U.S. Attorney John Walsh. “Thanks to the work of the prosecuting Assistant U.S. Attorney, Suneeta Hazra, and the investigation conducted by special agents from the IRS Criminal Investigation and the FBI, another con man has been held accountable for taking people’s hard earned money.”
“Investors should always be wary and cautioned of investment proposals that promise high returns on their investment. 'If it seems too good to be true', it is probably an investment scheme,” said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office.
“The FBI is fully committed to protecting innocent victims by aggressively investigating those who perpetrate investment fraud schemes,” said FBI Denver Division Special Agent in Charge Thomas Ravenelle said.
This case was investigated by agents with IRS-Criminal Investigation and the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Suneeta Hazra.