Connecticut Man Pleads Guilty to Ponzi and Tax Fraud Scheme
BOSTON – A Connecticut man who formerly owned ARO Equity, LLC pleaded guilty today in connection with a multi-year fraud scheme that caused more than $4 million in losses to investors.
Thomas D. Renison, 66, pleaded guilty to one count of conspiracy to commit wire fraud and two counts of filing false tax returns. U.S. District Judge George A. O’Toole, Jr. scheduled sentencing for Feb. 11, 2021.
According to the charging document, between 2015 and 2018, Renison and his co-conspirator, Timothy J. Allcott, fraudulently raised and solicited funds from victims to invest in ARO Equity LLC – a privately-held investment company that purportedly pooled money from investors and then invested it in various New England-based businesses. In order to raise these funds, Renison and Allcott misrepresented to victims how their money would be invested, ARO’s investment track record and the safety of the investments. Allcott and Renison also concealed Renison’s ownership interest and affiliation with ARO because Renison had previously been barred by the Securities and Exchange Commission (SEC) and regulators in Maine from working in the securities industry.
Over the course of the scheme, ARO took in over $5 million from investors; however, only about half of the funds were actually invested. Of the investments that were actually made, the substantial majority yielded significant losses. Despite these losses, none of the victims were informed of the poor performance of prior investments. Instead, the victims were told on many occasions that the investments were doing well and remained safe. When victims invested with ARO, they signed promissory notes, agreeing to receive monthly interest payments on their investments. ARO generally made these scheduled monthly payments; however, because ARO’s actual investments earned little to no returns, the monthly payments to existing investors were made using funds raised from more recent investors.
The defendants’ scheme also involved misrepresentations to the victims regarding how their investments would be used. Victims were generally told that their investments were to be used by ARO to fund investments in one of three different businesses. Despite this, the investment funds were often used for purposes other than what was represented to the investors – including using the funds to pay Renison and Allcott exorbitant commission fees, satisfy monthly interest obligations to other investors and to invest in different undisclosed businesses. As part of the scheme, Allcott and Renison disguised commissions paid to Renison as loans to Renison’s wife, which allowed them to continue concealing Renison’s ownership stake in the company. In addition, Renison failed to declare more than half a million dollars of commission income and failed to pay over $150,000 in taxes.
Allcott previously pleaded guilty to one count of conspiracy to commit wire fraud. In January 2020, the SEC charged Allcott and Renison with fraudulently misleading investors in connection with the same conduct.
United States Attorney Andrew E. Lelling; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Office; and Joleen Simpson, Acting Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston made the announcement today. Assistant U.S. Attorney Jordi de Llano, Deputy Chief of Lelling’s Securities, Financial & Cyber Fraud Unit, is prosecuting the case.