Boston...A Milton man was convicted late Thursday of orchestrating a Ponzi scheme, and a large scale mail fraud involving rare coins. He was also charged with laundering proceeds of his mail fraud scheme and with obstructing a United States Securities and Exchange Commission examination of his securities business.
Arnett L. Waters, 62, pleaded guilty on Nov. 29, 2012, before U.S. District Judge Denise J. Casper to seven counts of securities fraud, six counts of mail fraud, two counts of money laundering and one count of obstruction of justice.
Had the case proceeded to trial the Government’s evidence would have proven that from 2007 through 2012, Waters obtained approximately $839,000 from various investors by selling units in sham investment partnerships. He lulled investors into a false sense of security by telling them that their investments had generated substantial profits which would be paid to them in the near future. Waters spent most of the investors’ funds on personal and business expenses.
In April 2012, Waters was interviewed as part of an SEC examination of his securities business. During the interview, Waters falsely told examiners that no one had invested in his investment partnerships. In addition, between 2002 and 2012, Waters defrauded coin customers and obtained millions of dollars by selling coins at inflated prices. Waters convinced customers to buy coins at prices that, on average, represented a 600% mark-up from market value of the coins. Waters also induced coin purchasers to return coins to him, on the false pretense that he would sell those coins on the customers’ behalf. In the case of one victim, who had paid Waters over $7 million for coins, Waters convinced the victim to pay over half a million dollars for fees purportedly related to the sale and storage of the coins. In fact, Waters had already sold most or all of the coins and had used the proceeds for his own personal and business expenses.
On Oct. 2, 2012, Waters also pleaded guilty to two counts of criminal contempt for willfully violating an asset freeze order entered by the Court in a civil case brought against Waters by the SEC. At that plea hearing, the government told the Court that Waters had maintained a hidden bank account in violation of the asset freeze order. From the time the freeze order was entered in May 2012, through mid-July 2012, Waters deposited approximately $172,000 in proceeds from his mail fraud and dissipated approximately $152,000.
Judge Casper scheduled sentencing in both cases for April 25, 2012. Waters faces the following maximum penalties on each count for which he has been convicted: up to 20 years in prison, three years supervised release and a $5,000,000 fine for securities fraud; up to 20 years in prison, three years supervised release and a $250,000 fine for mail fraud; up to 10 years in prison, three years supervised release and a $250,000 fine for money laundering; and up to 20 years in prison, three years of supervised release and a $250,000 fine on the obstruction of justice charge.
United States Attorney Carmen M. Ortiz and Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division made the announcement today. United States Attorney Ortiz also expressed appreciation for the cooperation her office received from the United States Securities and Exchange Commission. The case is being prosecuted by Assistant U.S. Attorney Ryan M. DiSantis of Ortiz’s Economic Crimes Unit.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.