Longmont man is sentenced to 84 months in prison for investment fraud scheme
DENVER – Gary Snisky, age 49, of Longmont, Colorado was sentenced today by U.S. District Court Judge Raymond P. Moore to serve 84 months in federal prison, for mail fraud and money laundering, federal authorities announced. Following his prison sentence, Snisky was ordered to serve 3 years each on supervised release. He was also ordered by Judge Moore to pay $2,531,032.22 in restitution to the victims.
Snisky plead guilty on January 5, 2015 and was indicted by a federal grand jury in Denver on November 19, 2013. Snisky’s co-conspirator, Richard Greeott, plead guilty on October 7, 2013 to mail fraud and money laundering charges and was sentenced by Judge Phillip A. Brimmer on April 27, 2015 to six months in federal prison for his significantly smaller role in the scheme.
According to information contained in court documents for both cases, including the plea agreements and indictment, from 2009 through 2011, Snisky operated Colony Capital in Colorado, which purported to be a private equity firm offering investment opportunities in bonds, futures trading, and other offerings. In 2011, Snisky shut down Colony Capital and formed Arete in Longmont, Colorado, which operated in a similar manner. As part of his scheme, Snisky repeatedly falsely told financial advisors and investors that he was an “institutional trader” who was “on Bloomberg,” which Snisky claimed made him part of an elite group of people who could “make markets” and who had access to lucrative opportunities to which ordinary investors did not have access.
From July of 2011 through January 2013, Snisky offered investors a “proprietary value model” which was based on using the investors’ money to purchase Ginnie Mae bonds. Throughout 2012, Snisky continued to make false assurances about the safety of investing in the Bond Program despite the fact that Snisky knew that he had not purchased any Ginnie Mae bonds as promised. Throughout the scheme, Snisky sent fabricated account statements to investors that falsely reflected that their money had been invested in the bonds as promised.
Additionally, in 2010, Snisky asked Greeott to develop an algorithm to support a fully-automated trading system for trading in the futures market. In 2011, Greeott believed that he had developed an algorithm for trading in the futures market that he tested in a simulated environment for several months. However, at all times, the algorithm was still in a developmental phase. At no time did anyone at Colony Capital or Arete trade a significant amount of money or make any real profit in the futures market. However, starting in 2010, Snisky falsely led investors, potential investors, and financial advisors to believe the algorithm was being used by Colony Capital, and later Arete, to profitably trade in the futures market. Based on these false representations, several victims invested money in Snisky’s futures trading program.
The net loss Snisky caused to investors in the bond and futures trading programs was $5,226,965.54. To date, as a result of asset forfeiture proceedings, victims are in the process of being paid restitution in the amount of $2,695,913.31. The remaining amount of restitution is $2,531,032.22, most of which is jointly liable between Snisky and Greeott.
“The defendant took advantage of investors through a completely fraudulent scheme,” said U.S. Attorney John Walsh. “The prison sentence handed down serves not only as a deterrent to would-be fraudsters, but also as reassurance to victims of this financial crime.”
"The FBI will continue to protect the financial markets by working closely with its law enforcement and regulatory partners,” said FBI Denver Division Special Agent in Charge Thomas Ravenelle. ‘We trust that the outcome of this investigation will deter others who are seeking to engage in similar criminal activity, and attempting to defraud innocent investors.”
“All too often we hear of hard working Americans who lose their life savings to investment schemes; their trust was violated when they were lied to about the success and profitability of the investments,” said Gilbert R. Garza, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office.
“Investment Schemes, like many financial crimes, erodes the integrity of our financial industries, and can threaten the economic and emotional health of our investors,” said Adam P. Behnen, Inspector in Charge, U.S. Postal Inspection Service, Denver Division. “It is critical we make every effort to protect the public from investment fraud schemes and its effect on our consumers by ensuring the integrity of the U.S. Mail.”
This case was investigated by the Internal Revenue Service – Criminal Investigation, the Federal Bureau of Investigation, and the United States Postal Inspection Service.
This case was prosecuted by Assistant U.S. Attorney Pegeen D. Rhyne, with Assistant U.S. Attorney Tonya Andrews handling the forfeiture proceedings.