LEADER OF $73 MILLION PONZI SCHEME SENTENCED AGAIN TO 30 YEARS IN PRISON
Second Judge Says 30 Year Term “Rational and Reasonable”
JOHN W. ZIDAR, 66, formerly of Gardnerville, Nevada, was sentenced today in U.S. District Court in Seattle to 30 years in prison and three years of supervised release for leading what prosecutors call the largest Ponzi scheme ever prosecuted in the Western District of Washington. ZIDAR was originally sentenced by U.S. District Judge Barbara Rothstein in July 2003, for his multiple convictions for mail and wire fraud and money laundering. Recent rulings by the U.S. Supreme Court sent the case back for re-sentencing, once the sentencing guidelines became advisory, not mandatory. After a lengthy hearing, U.S. District Judge Ricardo S. Martinez said he believed the 30-year sentence Judge Rothstein imposed was the right one. “The defendant was the leader of a massive ‘Ponzi’ scheme designed to enrich the defendant.... This is an extremely serious offense with widespread financial damage done to thousands of victims,” Judge Martinez said.
According to the evidence at trial, beginning in 1997 and continuing until 2000, ZIDAR and his co-conspirators convinced nearly 3,500 victims to invest in a series of purported investment funds called Vista International (Vista), Oakleaf International (Oakleaf), and Rosewood International (Rosewood). Investors were told that these funds would be invested in the “private economic arena.” Investors were directed to send their applications to an address in Enumclaw, Washington, and were directed to send their investments to the same address or to wire them to a bank account in Lakewood, Washington.
ZIDAR and his co-defendants promised investors a return of 120% per year and told investors their principal was assured against loss. Investors also were told that if they rolled a single unit over for ten years it would be worth millions of dollars. In fact, the defendants actually were operating a Ponzi scheme, in which early investors were paid with later investors’ money. The evidence at trial established that the defendants diverted millions of dollars for their own use and benefit, including to purchase houses and expensive vehicles, and paid substantial commissions to the agents who solicited the investors. The defendants also laundered millions of dollars through bank accounts in Samoa, the Bahamas, and Costa Rica.
Prosecutors and a court-appointed receiver were able to locate about $25 million of the money taken by fraud, and it was returned to the investors who received about 40 cents for each dollar they had invested.
In their sentencing memo today, prosecutors quoted the impact statements from victims. Many said they had lost their life savings, their homes and retirement accounts. “We lost our home. The children have had to go without birthday and Christmas gifts. They had to sell off their toys. My son who is 18 has no money for college. . . . We have had to beg for help from government/church. We have all suffered depression & anger,” one victim wrote.
At sentencing, Judge Martinez noted the damage to those investors saying, “if they were devastated seven years ago, imagine how they are faring in today’s economic downturn.”
In asking for the Judge to again impose 30 years, prosecutors referenced the recent sentencing for Bernard Madoff. “As Judge Chin recently noted in sentencing Bernard Madoff to 150 years’ imprisonment, Madoff’s crime was ‘extraordinarily evil,’ it was ‘not merely a bloodless crime that takes place on paper but one that takes a staggering human toll.’ It is true that Madoff’s scheme was larger than Zidar’s, but the two cases are not qualitatively different. Zidar’s conduct was just as evil, and his crime took as significant a toll on many of his nearly 3,500 victims. Madoff, who was sentenced to 150 years, will never leave prison. Zidar is fortunate that a sentence of 30 years (approximately 26 years assuming good time) allows Zidar a chance to leave prison,” Assistant United States Attorney Andrew Friedman wrote to the court.
The case was prosecuted by Assistant United States Attorneys Carl Blackstone and Andrew Friedman. The case was investigated by the FBI, the Internal Revenue Service Criminal Investigation (IRS-CI) and by the United States Postal Inspection Service (USPIS).
For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110 or Emily.Langlie@USDOJ.Gov.