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bergen county, n.J. man sentenced to 100 months in prison for separate fraud scemes



FOR IMMEDIATE RELEASE

October 18, 2013


 

Former Investment Advisor ran Multimillion-dollar Ponzi Scheme,
Swindled Elderly, Disabled Widow

CAMDEN, N.J. – A Bergen County, N.J., man who claimed to run New Jersey-based hedge funds using a secret computer program to invest in foreign currency was sentenced today to 100 months in prison for defrauding victims of millions of dollars, conning an elderly, disabled widow out of her life savings and evading his tax obligations, U.S. Attorney Paul J. Fishman announced.  

George Sepero, 40, of Glen Rock, N.J., previously pleaded guilty to a superseding information charging him with wire fraud conspiracy, wire fraud and tax evasion before Chief U.S. District Judge Jerome B. Simandle in Camden federal court. Sepero has been remanded to federal custody since July 16, 2012, after violating the conditions of his supervised release through a continuing pattern of fraud.

“George Sepero stole millions in a Ponzi scheme and perpetrated a monstrous fraud on an elderly woman who was the definition of vulnerable,” said U.S. Attorney Fishman. “Blowing fortunes of other people’s money, he continued to commit scam after scam until he was locked up. It is fair that he spend his next years away from the society he victimized.”

According to documents filed in this case and statements made in court:

The Currency Investment Scheme

Beginning in 2009, Sepero – along with conspirators Carmelo Provenzano, 31, of Garfield, N.J., and Daniel Dragan, 43, of Lebanon, N.J. – claimed to run a series of hedge funds in New Jersey, luring investors with the prospect of extraordinary profits in foreign currency trading. The trio made numerous misrepresentations and omissions to induce their victims to invest in Caxton Capital Management and ACCP Pro Consulting Inc. Sepero claimed that he and his conspirators owned and controlled a proprietary computer algorithm for trading foreign currencies; that they had used the algorithm to achieve returns of more than 170 percent in the prior two years; and that any investment funds would be highly liquid and could be withdrawn on days’ notice.

Investors sent the defendants a total of more than $3.5 million. Sepero and the others invested little or no money in foreign currency or any other investment vehicle, instead diverting the vast majority of victims’ investments to pay prior victims in Ponzi-scheme style and to finance extravagant personal expenditures.

Sepero and his conspirators spent investor money on credit card bills averaging $25,000 per month; bar tabs of $18,241, including a $4,000 tip; $14,034 on separate nights at Drai’s Hollywood nightclub in Los Angeles; and flights to Paris and elsewhere. Sepero bought a custom Ford pickup truck for more than $80,000.

The defendants emailed victims fake statements showing their principal had been invested in the foreign currency markets and was achieving substantial results. Many of these e-mails were purportedly sent by an individual named  “Mel Tannenbaum,” a fictional character of Provenzano’s invention. 

The defendants also e-mailed to several investors screen shots of a computer-based trading program, which they claimed represented the investors’ funds being traded in the currency markets. In reality, the shots reflected trading in fictional accounts set up by the conspirators to dupe investors.

Provenzano and Dragan have also pleaded guilty before Judge Simandle and await sentencing.

The Annuity Account Scheme

Sepero worked as a financial planner at a financial institution for several years, but was fired in 2006 because of investigations into his churning of clients’ accounts. While at the institution, Sepero took control of the annuity account of one of his clients – an elderly, paraplegic woman with dementia – which was her sole means of providing for her retirement and nursing expenses.

After his termination, Sepero lied to the woman and her family, telling them he was still authorized to manage the annuity account.  When his victim had money to add to the account, Sepero directed her to give him checks made payable to his company Casa Nostra Enterprises. Instead of transferring the money to the annuity account, Sepero spent it on his own expenses: credit card and other bills, mortgage payments and car payments, among other things. 

To hide the fraud, Sepero fabricated a bogus account statement showing that the annuity account was worth more than $700,000, when, for the period covered by the statement, it actually contained $16.57.
 
Sepero placed recorded phone calls to the administrator of the annuity account, during which he impersonated both his victim’s son and her husband. Her husband died more than three years before Sepero made the calls.

Sepero also pleaded guilty to tax evasion for the tax year 2010, as he derived income from his fraudulent activities, but did not file a tax return and deposited his victims’ money into his companies’ accounts. 

In addition to the prison term, Judge Simandle sentenced Sepero to three years of supervised release and ordered him to pay restitution of $4,985,361. In imposing the sentence, Judge Simandle considered Sepero’s criminal behavior while out on supervised release in this case.

According to the government:

During his supervised release, Sepero engaged in a fraudulent “lease to own” agreement with his tenant at the Maywood, N.J., property Sepero was using to secure his bail. When the tenant became suspicious of the arrangement and discovered Sepero’s pending charges, Sepero fabricated an email from PNC Mortgage that made it appear there was a legitimate sale agreement.

Prior to his remand, Sepero also used a relative’s credit card to run up more than $9,000 in unauthorized charges.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, for the investigation.  He also thanked the Commodity Futures Trading Commission’s New York Regional Office, under the direction of David Meister.

The government is represented by Unit Chief Christopher Kelly and Assistant U.S. Attorney Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit and Evan Weitz of the Office’s Asset Forfeiture Unit in Newark.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. The task force was established 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 nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.

13-404                                   

Defense counsel: John Weischel Esq., Hackensack, N.J.

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