Shasta County and Butte County Residents Charged in $35M Ponzi Scheme
For Immediate Release
U.S. Attorney's Office, Eastern District of California
SACRAMENTO, Calif. — The creator of investment companies Family Wealth Legacy and Zolla was arrested today for a $35 million fraud scheme, U.S. Attorney McGregor W. Scott announced.
Matthew Piercey, 44, of Palo Cedro, was arrested today after a grand jury returned an indictment on Nov. 12, charging him with wire fraud, mail fraud, money laundering, and witness tampering. The indictment was unsealed today following his arrest.
When law enforcement agents attempted to arrest Piercey today, he fled from arrest by leading agents on a vehicle chase through residential neighborhoods and then onto the highway before abandoning his vehicle and entering Lake Shasta with an underwater submersible device. Law enforcement officers arrested him after he emerged from the lake.
In addition, Kenneth Winton, 67, of Oroville, was charged separately by criminal information with conspiracy to commit wire fraud.
According to court documents, from about July 2015 through August 2020, Piercey carried out an investment fraud scheme that raised a total of approximately $35 million in investor funds. Piercey used Family Wealth Legacy and Zolla to solicit funds from investors using a variety of false and misleading statements, including about trading algorithms, the success of the companies’ investment strategies, and the liquidity of investments. For example, Piercey solicited investor money for an “Upvesting Fund” that allegedly was an algorithmic trading fund with a history of success, but he admitted privately to an associate that there was no Upvesting Fund. Piercey first recruited Winton as an investor, then to assist with raising investor funds, and ultimately to take on management responsibilities at Zolla. From 2018 to 2020, Winton conspired with Piercey and made various false and misleading statements to investors, including about the success of Zolla’s investment strategies, the reasons for delays in payment to investors, and the current location, value, and nature of Zolla investments.
Piercey and Winton used some investor money to make payments to other investors in a “Ponzi scheme.” In total, they paid back approximately $8.8 million to investors. They used other investor money for various business and personal expenses, including two residential properties and a houseboat. Few, if any, liquid assets remain to repay investors.
According to court documents, Piercey also tampered with multiple witnesses by discouraging them from responding to grand jury subpoenas related to the investigation.
This case is the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Christopher S. Hales and Miriam R. Hinman are prosecuting the case.
Piercey is scheduled for his initial appearance and arraignment on Tuesday, Nov. 16. Winton is scheduled for his initial appearance on Thursday, Nov. 19.
If convicted, Piercey faces a maximum statutory penalty of 20 years in prison and a fine of up to $250,000 or twice the gross gain or loss, whichever is greater, for each wire fraud and mail fraud count; 20 years in prison and a fine of up to $250,000 for each witness tampering count; and 20 years in prison and a fine of up to $500,000 or twice the value of the property involved, whichever is greater, for each money laundering count. If convicted, Winton faces a maximum statutory penalty of 20 years in prison and a fine of up to $250,000 or twice the gross gain or loss, whichever is greater. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
Updated November 20, 2020
Press Release Number: 2:20-cr-211 TLN, 2:20-cr-216 KJM