News and Press Releases

Commodities Pool Operator Pleads Guilty in Connection with a Ponzi Scheme

February 16, 2012

Earlier today, Hasaan Steel of Brooklyn, New York, pleaded guilty to wire fraud arising from his operation of a Ponzi scheme. The guilty plea proceedings were held before United States District Judge Nicholas G. Garaufis, at the federal courthouse in Brooklyn. Steel faces a maximum statutory sentence of 20 years’ incarceration, as well as payment of restitution to the victims of his crime.

The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Ronald J. Verrochio, Postal Inspector-in-Charge, United States Postal Inspection Service, Victor W. Lessoff, Acting Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York Field Office, and James T. Hayes, Jr., Special Agent-in-Charge U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), New York Field Office.

According to the indictment and his guilty plea allocution, Steel held himself out as a self-employed day trader and solicited investments in an investment pool that he claimed to manage. Steel represented to investors that he would invest their money in stocks and commodity futures contracts, and that he had consistently generated monthly returns of more than 20 percent. Steel’s representations about the rates of return he earned from investing and his trading activity were false. In fact, he traded only a small portion of the money he received from investors and used the bulk of the solicited funds to pay prior investors, to gamble and for other unauthorized purposes. As part of the scheme, Steel sent investors e-mails reflecting fraudulent returns and fraudulent trading account balances for the investment pool. The scheme resulted in more than $400,000 in losses to victim investors.

“The defendant solicited money with bogus claims of trading performance and lied about what he did with that money. Claiming to represent a diversified investment pool, in reality he represented only himself and his greed, plundering his customers’ accounts to support his gambling habit and personal expenses. Such conduct undermines the public’s confidence in the nation’s financial markets and will be vigorously investigated and prosecuted,” stated United States Attorney Lynch.

Postal Inspector-in-Charge Verrochio stated, “Postal Inspectors will vigorously investigate and prosecute those individuals who participate in financial schemes designed to defraud investors, both domestically and abroad.”

IRS Acting Special Agent-in-Charge Lessoff stated, “This investigation is another illustration of how Ponzi scheme operators tout high rates of return in order to attract victims. People should diligently check into such returns before investing. They should not blindly follow the advice of any one person.”

“Mr. Steel used the investments of unsuspecting stakeholders as his own play money to gamble and pay back individuals he previously defrauded; it was a continuous circle of deception,”said HSI Special Agent-in-Charge Hayes. “Our agency’s primary goal is to protect Americans from criminals style="margin-bottom:19px; margin-right:12px; text-indent:48px" like Steel who intentionally target innocent investors and rob them of their personal financial security.”

Ms. Lynch expressed her grateful appreciation to the agencies who participated in the government’s investigation, and thanked the United States Commodity Futures Trading Commission for its assistance.

The government’s case is being prosecuted by Assistant United States Attorney Shannon C. Jones.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency 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.

The Defendant:

Age: 27

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