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United States Attorney's Office District of Connecticut
Press Release

January 25, 2011

GUILFORD MAN SENTENCED TO MORE THAN FIVE YEARS
IN PRISON FOR RUNNING $2 MILLION INVESTMENT SCHEME

David B. Fein, United States Attorney for the District of Connecticut, announced that CARLOS GARCIA, 48, of Bayberry Lane, Guilford, was sentenced today by United States District Judge Vanessa L. Bryant in Hartford to 63 months of imprisonment, followed by three years of supervised release, for operating a $2 million investment scheme.

“This sentence should serve as a warning to any individual who intends to operate an investment fraud scheme,” stated U.S. Attorney Fein.  “The Connecticut U.S. Attorney’s Office and our federal, state and local law enforcement partners are committed to investigating financial fraud schemes and prosecuting those involved in order to seek justice for victims.”

According to court documents and statements made in court, from at least as early as 2002 until 2009, GARCIA purported to be an investment advisor/hedge fund manager, selling shares in “Paramount Equity Partners, LLC,” an investment vehicle that he represented would be used to invest client funds.  GARCIA directed certain clients to cash out their stock holdings or other investments, obtain surrender checks by mail, and endorse the checks over to “Garcia Capital Management, LLC,” an entity that GARCIA controlled.  GARCIA then deposited the surrender checks into the Garcia Capital Management, LLC bank account.  GARCIA directed other clients to wire transfer money directly into the bank account for Paramount Equity Partners, LLC, and he then transferred those funds into the Garcia Capital Management, LLC bank account.

Instead of investing the funds as promised, GARCIA used clients’ money to pay for personal expenses for himself and his family, and to make “lulling” payments to clients.  Through this scheme, GARCIA victimized at least 10 people and caused a net loss to his victims of more than $2 million.

As part of the scheme, GARCIA created and mailed bogus account statements and correspondence to his client victims that discussed the returns they were earning on their investments.  In some cases, GARCIA also created false federal Internal Revenue Service Form 1065 Schedule K-1s so that victims filed false tax returns and paid taxes on returns they never earned.

GARCIA also willfully evaded the payment of income taxes for the tax years 2005, 2006, 2007 and 2008, resulting in a tax loss to the government of $38,145.

On November 4, 2010, GARCIA pleaded guilty to one count of mail fraud, one count of wire fraud and four counts of tax evasion.

Today, Judge Bryant ordered GARCIA to pay restitution in the amount of $2,061,604.42 to the victims of his scheme.  GARCIA also must resolve his outstanding tax liabilities with the IRS.

This matter was investigated by the Internal Revenue Service – Criminal Investigation and the Federal Bureau of Investigation.  The case was prosecuted by Assistant United States Attorney Susan L. Wines.

In December 2010, the U.S. Attorney’s Office and several law enforcement and regulatory partners announced the formation of the Connecticut Securities, Commodities and Investor Fraud Task Force, which is investigating matters relating to insider trading, market manipulation, Ponzi schemes, investor fraud, financial statement fraud, violations of the Foreign Corrupt Practices Act, and embezzlement.  The Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service – Criminal Investigation; U.S. Secret Service; U.S. Postal Inspection Service; U.S. Department of Justice’s Criminal Division, Fraud Section and Antitrust Division; U.S. Securities and Exchange Commission (SEC); U.S. Commodity Futures Trading Commission (CFTC); Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Office of the Chief State’s Attorney; State of Connecticut Department of Banking; Greenwich Police Department and Stamford Police Department.

Citizens are encouraged to report any financial fraud schemes by calling, toll free, 855-236-9740, or by sending an email to ctsecuritiesfraud@ic.fbi.gov.

 

CONTACT:

 

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

 

 

 

 

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