Long Island Investment Advisor Pleads Guilty In Multi-Million Dollar Securities Fraud and Ponzi Scheme
Defendant Targeted and Defrauded Dozens of Elderly Investors from 2000 to 2018
Earlier today, in federal court in Central Islip, Steven Pagartanis pleaded guilty before United States District Judge Joseph F. Bianco to conspiracy to commit mail and wire fraud for orchestrating a Ponzi scheme over the course of 18 years.
Richard P. Donoghue, 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 James Robnett, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (IRS-CI), announced the charges.
“Pagartanis perpetrated his fraud scheme against elderly investors who could least afford to lose their life savings,” stated United States Attorney Donoghue. “Protecting older Americans from financial predators like the defendant is a priority of the Department of Justice.”
As admitted at his guilty plea and as detailed in court documents, from January 2000 to March 2018, Pagartanis, a formerly licensed financial advisor and affiliate of a registered broker-dealer, solicited elderly victims to invest in real estate-related investments, including those affiliated with publicly traded entities, a Canadian company and an international hotel conglomerate. Pagartanis promised the victims that their principal would be secure and earn a fixed return, which he typically claimed to be between 4.5 to 8 percent annually. At Pagartanis’s direction, the victims wrote checks payable to an entity secretly controlled by Pagartanis. Pagartanis utilized a network of bank accounts to launder the stolen funds, which he used to pay personal expenses, buy luxury items and make the guaranteed “interest” or “dividend” payments to other victims. Pagartanis created fictitious account statements reflecting ownership interests in the purported investments to induce investment and conceal the scheme. In all, the victims invested over $13 million and sustained actual losses of over $9 million. Many lost substantial portions of their life savings as a result of the scheme.
When sentenced, Pagartanis faces up to 20 years’ imprisonment. The SEC has filed a civil case against Pagartanis, which was stayed pending resolution of the criminal case.
The government’s criminal case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorney Artie McConnell is in charge of the prosecution.
East Setauket, New York
E.D.N.Y. Docket No. 18-CR-374 (DRH)