Former Belmont Resident Charged With $6 Million Investment Fraud Scheme
BOSTON – A former Belmont resident was arrested today in El Paso, Texas after being charged in U.S. District Court in Boston with defrauding at least 15 investors of more than $6 million.
John William Cranney, aka Jack Cranney, 73, was charged in an indictment unsealed today with four counts of wire fraud, 16 counts of mail fraud, and three counts of money laundering.
The indictment alleges that Cranney solicited money from people with whom he had personal and business relationships, represented that the money would be invested on their behalf, and guaranteed them a specific rate of return. In fact, Cranney did not invest the money, but instead spent it on personal and business expenses and to repay other victims and creditors.
According to the indictment, Cranney established shell investment entities called Cranney Capital I and Cranney Capital III and directed investors to send their money to those entities. Cranney led investors to believe that their funds were being invested through those entities, when, in fact, Cranney caused all funds deposited to those accounts to be transferred promptly to other accounts for his own use. Cranney also established the Cranney Capital I LLC Employee Stock Ownership Trust (ESOT), and represented to prospective investors that they could “roll over” their money held in IRA and 401(k) retirement accounts to the ESOT without paying withdrawal taxes and penalties, even though Cranney knew that none of the investors were employees of his or of the Cranney Capital I LLC. Cranney also sent some investors reports which purported to reflect the amounts those investors had earned and the total balance in their accounts, when in fact no such amounts had been earned and the stated balances did not exist in any account because Cranney had already spent all of the funds.
The maximum sentence under the mail and wire fraud statutes is 20 years in prison, three years of supervised release and a $250,000 fine or twice the gross gain/loss, whichever is greater. The maximum sentence under the money laundering statute is 10 years in prison, three years of supervised release and a $250,000 fine or twice the amount of the criminally derived property in the transaction, whichever is greater. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; and Susan A. Hensley, Regional Director of the U.S. Department of Labor, Employee Benefits Security Administration, made the announcement today. The U.S. Attorney’s Office also received assistance in its investigation from the Office of the Secretary of State of the Commonwealth of Massachusetts and his Securities Division, as well as the U.S. Trustee’s Office in Boston. The case is being prosecuted by Mark J. Balthazard of Ortiz’s Economic Crimes Unit.
The details contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.