Long Island Investment Advisor Sentenced To 55 Months In Prison For Ponzi Scheme

CENTRAL ISLIP, NY – Earlier today, Paul Sullivan, a Long Island-based investment advisor, was sentenced in federal court to 55 months’ imprisonment. In November 2013, Sullivan pleaded guilty to wire fraud for engaging in a Ponzi scheme that defrauded investors of approximately $1.9 million. As part of the sentence, Sullivan was also sentenced to 3 years’ supervised release and ordered to pay $1.9 million in restitution to the victims of his fraud.

The sentence was announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York; Raymond R. Parmer, Jr., Special Agent-in-Charge, U.S. Department of Homeland Security, Homeland Security Investigations (DHS-HSI), New York; and Shantelle P. Kitchen, Special-Agent-in-Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), New York.

“Sullivan abused the trust placed in him by his clients, many of whom considered him a close friend. Sullivan then dug a deeper hole for himself and his clients by orchestrating a Ponzi scheme that ensnared even more victims,” stated Acting United States Attorney Currie. “We are committed to bringing to justice those who seek to defraud the investing public.” Mr. Currie thanked DHS-HSI and the IRS-CI for their cooperation and assistance in the investigation and prosecution of this case.

Sullivan, a licensed financial advisor, made investments without his clients’ authorization that resulted in significant losses. When these losses were discovered, Sullivan admitted his misconduct to some clients and attempted to prevent them from alerting the authorities by promising to reimburse the clients for their losses. However, in order to obtain the money to reimburse these clients, Sullivan stole funds belonging to other clients. Sullivan falsely told the clients from whom he stole funds that he was investing their money in special private investments with high rates of return. When one of the Sullivan’s defrauded clients confronted him using a hidden camera, Sullivan admitted that he had used the client’s funds to repay another client’s investment losses, stating: “What I did was completely illegal, completely wrong . . . everything I’ve done was wrong, was illegal, I have nothing to say.”

The charges were brought in connection with the President’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 is 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. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.

Today’s sentence was imposed by United States District Judge Leonard D. Wexler.

The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorney Daniel Spector is in charge of the prosecution.

The Defendant:

PAUL SULLIVAN

Age: 50

Franklin Square, New York

E.D.N.Y. Docket No. 12-CR-642