PONZI SCHEMER SENTENCED TO MORE
THAN EIGHT YEARS IN FEDERAL PRISON
David B. Fein, United States Attorney for the District of Connecticut, announced that GREGORY VIOLA, 60, of Orange, was sentenced today by United States District Judge Vanessa L. Bryant in Hartford to 100 months of imprisonment, followed by three years of supervised release, for operating a Ponzi scheme that defrauded more than 50 investors of more than $6 million.
“This defendant violated the trust of dozens of investors by stealing millions in funds, which he used to pay his mortgage and for jewelry purchases, country club memberships and other personal expenses,” stated U.S. Attorney Fein. “There has been a rise in investment fraud schemes around the country, and the Department of Justice and our law enforcement and regulatory partners are committed to educating the public and helping prevent investor fraud before it happens. Citizens are strongly encouraged to research investment opportunities thoroughly, and to be wary of promises of consistent and guaranteed returns. I commend the FBI, the Stamford Police and the Connecticut Department of Banking, all members of our Connecticut Securities, Commodities and Investor Fraud Task Force, for bringing this defendant to justice.”
According to court documents and statements made in court, from 1989 to about 2006, VIOLA worked for various companies doing tax compliance. During much of that time, he also conducted an investment business in addition to preparing tax returns for profit. Although VIOLA was not a licensed or registered investment adviser, he solicited and received funds from investors, some of whom were his tax clients. VIOLA repeatedly represented to his investors that he would invest their funds and help them generate a return on their investments. VIOLA found investors based on referrals from existing investors rather than through any form of advertising. In some cases, VIOLA represented to investors that he would provide a dividend or interest payment in addition to the possibility of appreciation on the investments.
From approximately 2007 to July 2011, VIOLA engaged in a scheme to defraud his investors when he became unable to make the required dividend payments. As part of the scheme, VIOLA used funds obtained from investors to make payments to earlier investors. In order to prevent his investors from becoming aware that he was using new investor funds to make returns to older investors, he created and mailed fraudulent online account statements that falsely portrayed the value of investment accounts. As of May 2011, VIOLA falsely represented to victim investors that they had more than $10 million on account. In truth, $10 million in funds did not exist, and the funds that did exist were not fully invested in online trading accounts but were commingled with funds in VIOLA’s own personal bank accounts.
Through this scheme, VIOLA caused more than 50 investors to lose approximately $6.8 million. In addition to paying earlier investors about $2.5 million of the invested funds, VIOLA used invested funds to pay personal expenses, including his mortgage.
Numerous victims submitted victim impact statements to the court, and seven victims addressed the court during today’s sentencing proceeding. A married couple who more than $100,000 stated “We are both 80 years old. We invested our life savings and now its gone. We are depressed [and] very worried about last years of life.” Another victim who lost more than $114,000 and was forced to relocate from Connecticut explained “I may not have lost as much as other victims, but I lost all that I had. I equate the financial losses I incurred, due to Greg Viola’s scheme, as devastating as the death of my husband . . . . The words heartbroken, devastated, and embarrassed don’t scratch the surface of my feelings. The guilt that I allowed myself to be gullible enough to lose everything and jeopardize my daughter’s future and add to their burden is overwhelming.”
VIOLA was ordered to pay restitution in the amount of $6,872,633.97.
VIOLA was arrested on August 11, 2011. On February 1, 2012, he pleaded guilty to two counts of mail fraud.
This matter was investigated by the Federal Bureau of Investigation with the assistance of the Stamford Police Department and the Connecticut Department of Banking. The case was prosecuted by Senior Litigation Counsel Richard J. Schechter.
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 firstname.lastname@example.org.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants.
To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.
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