California men sentenced to prison for operating ponzi scheme
Steven G. Barkus was sentenced to more than eight years in prison and Michael A. Lombardo to nearly five years in prison for their role in swindling investors, including friends, associates, members of Barkus’ church, and others who trusted them, through false representations and promises, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
U.S. District Judge Patricia A. Gaughan, United States District Court for the Northern District of Ohio, sentenced Barkus to 97 months of incarceration and Lombardo to 57 months of incarceration.
The defendants, both residents of California, were also sentenced for tax violations arising from their conspiracy to evade an assessment of more than $1 million each and failure to pay taxes on monies obtained from investors which constituted income.
They were also ordered to make restitution to the investor fraud victims of $905,000 and Internal Revenue Service of $2,788,778.
“I find your conduct to be absolutely despicable,” Judge Gaughan said to Barkus during the sentencing hearing. “You defrauded close family, friends , and you defrauded church members who trusted you, and frankly, there were the times when I heard the testimony of these witnesses that I tjust seemed incredible that they continued to give you money after money because of your staggering ability to con these people.”
Barkus and Lombardo recruited Steven I. Helfgott, a now disbarred attorney from Cleveland, Ohio, to collect and hide investors’ funds from the Internal Revenue Service. They used nominee or shell bank accounts, primarily Helfgott’s attorney trust account and PCF Finance Partners Fund, Inc. (a defunct California corporation), to evade the collection efforts of the Internal Revenue Service and divert the money for their personal use, according to court records and testimony.
Helfgott pleaded guilty to conspiring with defendants Barkus and Lombardo, as well as to a separate securities fraud, bank fraud, and money laundering charges. He was previously sentenced to 18 months incarceration by District Judge John Adams.
After fully serving his sentence, Helfgott testified against defendants Barkus and Lombardo without further benefit for his cooperation.
Barkus and Lombardo, were charged in a 15count superseding indictment which included two sets of charges pertaining to fraud and tax violations. The fraud counts included one count of conspiracy, one count of wire fraud, two counts of mail fraud, and one count of securities fraud. The tax counts consisted of a conspiracy to evade the payment and assessment of taxes as well as substantive charges for evasion of payment and evasion of assessment.
Following a seven week trial, Barkus was convicted on all counts charged in the superseding indictment and defendant Lombardo was convicted of all tax counts, the fraud conspiracy charge and a substantive count of securities fraud.
This case was successfully prosecuted by Assistant United States Attorneys Robert J. Patton and Christian H. Stickan, following an investigation by the Cleveland Office of the Internal Revenue Service, Criminal Investigation Division, and Postal Inspection Service, with assistance from auditors and support staff from the United States Attorney’s Office for the Northern District of Ohio and the Internal Revenue Service.