OPERATOR OF $8.9 MILLION PONZI SCHEME RECEIVES 131-MONTH SENTENCE
TUESDAY, OCTOBER 23, 2012
Public Affairs Officer
CINCINNATI – Jasen Snelling, 48, Cincinnati, was sentenced to 131 months in prison, ordered to pay $5,336,177.78 in restitution to victims and $596,928.69 in restitution to the IRS for his role in an investment scheme that ensnared approximately 72 investors in Ohio, Indiana and Kentucky.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Dugan Wong, Inspector in Charge, U.S. Postal Inspection Service, and Darryl Williams, Special Agent in Charge, Internal Revenue Service Criminal Investigation, Cincinnati Field Office (IRS), announced the sentence imposed today by Senior U.S. District Judge Herman J. Weber.
On June 28, 2012, Snelling pleaded guilty to three counts of a four-count bill of information charging him and his co-conspirator, Jerry Smith, 50, Brookville Indiana with crimes arising out of their operation of a multi-million dollar Ponzi scheme. Snelling admitted that he engaged in a mail and wire fraud conspiracy in connection with a scheme to defraud investors in CityFund and Dunhill, two bogus “day trading” entities which were nothing more than bank accounts where investors’ funds were deposited and then spent by Snelling and Smith.
Snelling also admitted that he engaged in obstruction by creating fictitious trading statements and providing them to federal agents to impede the investigation and cover up the fraud. Finally, Snelling admitted that he committed tax evasion by failing to report the embezzled investor funds as income on his tax returns for the tax year 2008 and additional tax years.
“Consistent with a classic Ponzi scheme, early investors were paid interest or return of capital payments, which were not generated by investment earnings, but rather by monies solicited from later investors,” Stewart said. “These payments served to lull the victims into a false sense of security and to prevent or delay the discovery of the fraudulent investment scheme.”
During the course of this fraudulent scheme, Snelling made ATM withdrawals directly out of the CityFund account and paid for many personal expenses including his mortgage, his children’s private school tuition, and his credit card.
For the 2005 through 2010 income tax years, Snelling willfully and knowingly omitted a total of $2,091,770.54 in income derived from the stolen investment funds on his personal income tax returns, resulting in a total tax loss to the IRS of $596,928.69.
Snelling was ordered to forfeit a boat, trailer and real estate he owned in Michigan.
Smith’s sentencing is scheduled for January 17, 2013.
“The Postal Inspection Service is committed to investigating investment schemes like the one run by Smith and Snelling that target Postal customers every day,” Inspector in Charge Wong said. “Postal Inspectors have a long history of investigating mail fraud dating back to Charles Ponzi himself. It is part of our mission to protect the customers of the Postal Service.”
“Investment fraud is like a 'house of cards.' Because Ponzi schemes have no legitimate business purpose, they can collapse when the money runs out, leaving many investors in financial ruin," said IRS Special Agent in Charge Williams. “Investors should watch for red flags, such as guaranteed above-market interest earnings. Investors should thoroughly investigate the nature of any investment before investing their retirement savings.”
This case was prosecuted by Senior Litigator Anne L. Porter and was investigated by U.S. Postal Inspectors and special agents of IRS-Criminal Investigation.