U.S. Promoter of Foreign Cryptocurrency Companies Sentenced to 60 Months in Prison for His Role in Multi-Million Dollar Securities Fraud Scheme
Earlier today, in federal court in Central Islip, Tommy Constantine was sentenced by United States Circuit Judge Joseph F. Bianco to 10 years’ imprisonment for stealing millions of dollars raised from Long Island residents and professional athletes that were intended for investment in land developments in Hawaii and a start-up credit card business based in Arizona, among other purposes. Constantine and coconspirator Phillip Kenner were convicted at trial in July 2015. Constantine was convicted of one count of conspiracy to commit wire fraud, five substantive counts of wire fraud, and one count of conspiracy to commit money laundering. The Court entered a forfeiture money judgment in the amount of approximately $8.5 million and ordered that Constantine forfeit all his right, title and interest in specific assets, including an oceanfront resort in Mexico, real property in Hawaii and a Falcon 10 jet airplane, and ordered restitution in the amount of $5.2 million. On October 5, 2020, Judge Bianco sentenced Kenner to 17 years’ imprisonment. The Court has scheduled a restitution proceeding for Kenner on November 18, 2020.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation (IRS-CI), announced the sentence.
“For years, Constantine and his coconspirator abused the trust that these victims placed in them, stealing their hard-won earnings and diverting millions of dollars for their own use. When the investors started asking questions, rather than come clean, Constantine doubled down, re-victimizing the victims by convincing them to put even more good money in their bad hands. The jury’s verdict, and the Court’s sentences, reaffirm that greed-fueled crime will not pay off for fraudsters in the end,” stated Acting United States Attorney DuCharme. Mr. DuCharme expressed his grateful appreciation to the FBI and IRS, the agencies responsible for leading the government’s investigation.
“Constantine convinced investors to trust him with their money, on more than one occasion, for the sole purpose of diverting their funds into entities that benefited him. He’s the next in line in this case to receive his sentence today and face the consequences of his actions,” stated FBI Assistant Director-in-Charge Sweeney.
“Tommy Constantine and co-conspirator, Phillip Kenner, created a multi-million dollar criminal enterprise based on other people’s money,” stated IRS Special Agent-in-Charge Larsen. “Constantine went to great lengths in cultivating relationships based on trust and promises of future earnings. Constantine then breached that trust of several victims who have reached the pinnacle of success all for his personal gain. IRS-CI will continue to unravel these criminal enterprises where fraud is perpetuated and victims harmed.”
As early as 2004, Constantine and Kenner siphoned millions of investor dollars into a labyrinth of holding companies, diverting those dollars from their approved uses into companies, real estate and other ventures – such as Constantine’s car racing endeavors – that solely benefited the defendants.
Constantine gained access to these investor funds via his relationship with Kenner. Kenner was a collegiate hockey player in upstate New York, and his teammate, Joe Juneau, a future Olympian and National Hockey League star, introduced Kenner to a number of other NHL players in the 1990’s as Kenner began his career as a Boston-based financial advisor. Through those early contacts, Kenner developed a roster of clients, including former New York Islander Michael Peca; former New York Islander and New York Ranger Brian Berard; Darryl Sydor and Bill Ranford, both two-time Stanley Cup champions; and other NHL players whose careers and playing earnings blossomed just as they placed more and more trust in Kenner to invest and manage their finances and wealth. Instead, Kenner and Constantine diverted these earnings for their own uses.
The Hawaii Real Estate Investment Scheme
Beginning in 2003, Kenner convinced Peca, Berard and several others to invest $100,000 each for the development of land in Hawaii into luxury estates and to open personal lines of credit at a bank, collateralized by their personal stock, bond and savings accounts worth at least $10 million. Kenner assured the investors that the lines of credit would be used only to pay for initial development costs associated with the Hawaii project and would be fully replenished after Lehman Brothers Holdings, Inc. agreed to loan the project up to $105 million in August 2006. In fact, Kenner borrowed nearly all of investors’ lines of credit to acquire his personal interest in unrelated real estate projects in Hawaii and Mexico and to cover his own and Constantine’s personal expenses.
In an offshoot of the scheme, Constantine brokered a $3.5 million loan from an Arizona businessman ostensibly to close on a Hawaii parcel of land. Constantine put up no money of his own, but walked away from the transaction – funded with assets diverted from Peca, Berard and others – with approximately $2 million.
The Eufora LLC Scheme
In 2002, Constantine founded Eufora LLC, a prepaid debit card business. Between February 2008 and May 2009, Eufora was operating in the red, and as Constantine testified in civil depositions, the company was nearly worthless. Notwithstanding, Kenner persuaded clients to invest in Eufora. While representing that he was investing his clients’ funds in Eufora, Kenner instead wired $725,000 of his clients’ funds to Constantine’s personal account. Kenner also directed the wiring of an additional $700,000 of his clients’ funds to Eufora’s account, and promptly re-wired those funds to a coconspirator’s personal account. The diverted funds were used to cover the costs of Kenner’s and Constantine’s home mortgages, credit card bills and other debts.
The Global Settlement Fund Scheme
In early 2009, Kenner’s clients who had opened lines of credit for the Hawaii venture received notices that their credit lines were in default. For years, Kenner concealed that he had wiped out most of his clients’ funds by borrowing against one line of credit to pay monthly interest charges for other another account. By late 2008, the concealment scheme collapsed. Notwithstanding, Kenner and Constantine persuaded their clients to invest additional funds to a Global Settlement Fund. The clients contributed more than $2.9 million toward the fund, but the vast majority of the money was diverted to the defendants’ personal use, which included Constantine buying his personal home out of foreclosure, Kenner and Constantine paying legal bills related to Kenner’s personal investment in a tequila company in Mexico, defending Constantine in Florida litigation over his race car sponsorship activities, and an exploratory and unsuccessful effort by Constantine to buy Playboy Enterprises.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Saritha Komatireddy and J. Matthew Haggans are in charge of the prosecution. Assistant United States Attorneys Diane Leonardo and Madeline O’Connor are responsible for the forfeiture of assets.
PHILLIP A. KENNER
E.D.N.Y. Docket No. 13-CR-607 (JFB)
United States Attorney’s Office