Two Worcester County Men Sentenced for Trafficking Contraband Smokeless Tobacco To Evade Over $2 Million in Taxes
Boston – On April 25, a Milton man was sentenced to 17 years in federal prison for orchestrating a large Ponzi scheme through his securities company, and for defrauding customers of millions of dollars by selling coins at inflated prices.
On October 2, 2012, Arnett L. Waters, 63, pleaded guilty to two counts of criminal contempt. On November 29, 2012, he also pleaded guilty to seven counts of securities fraud, six counts of mail fraud, two counts of money laundering, and one count of obstruction of justice. In addition to the prison term, United States District Judge Denise J. Casper sentenced Waters to three years of supervised release, as well as restitution and forfeiture in the amounts of over $9 million.
U.S. Attorney Carmen M. Ortiz said, “The personal nature of this fraud, the effort and calculation necessary to carry it out, and the defendant’s utter disregard for his victims and the law, makes this one of the most serious white collar cases in Massachusetts in recent memory. This crime, while not violent, had a profound and direct impact on the lives of victims who lost life savings, retirement money, funds for college educations, and funds meant for the benefit of the defendant’s own church.”
From 2007 through 2012, Waters obtained roughly $839,000 from various investors by selling units in sham investment partnerships. He spent most of the investors' funds on personal and business expenses. Waters lulled investors into a false sense of security by telling them that their investments had generated substantial profits which would be paid to them in the near future.
In April 2012, Waters was interviewed as part of an examination United States Securities and Exchange Commission of his securities business. During the interview, Waters falsely told examiners that no one had invested in his investment partnerships.
In addition, between 2002 and 2012, Waters defrauded coin customers and obtained millions of dollars by selling coins at inflated prices. Waters convinced customers to buy coins at prices that, on average, represented a 600% mark-up from market value of the coins. Waters also induced coin purchasers to return coins to him, on the false pretense that he would sell those coins on their behalf. Waters convinced one victim, who had paid Waters over $7 million for coins, to further pay him over half a million dollars for fees purportedly related to the sale and storage of the coins. In fact, Waters had already sold most or all of the coins and had used the proceeds for his own personal and business expenses.
Waters also engaged in criminal contempt when he maintained a hidden bank account in violation of the asset freeze order in a civil fraud case brought against him by the SEC. From the time the freeze order was entered in May 2012 through mid-July 2012, Waters deposited approximately $172,000 in proceeds from his mail fraud and dissipated approximately $152,000.
U.S. Attorney Ortiz and Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The United States Attorney’s Office appreciates the cooperation received from the United States Securities and Exchange Commission. This matter came to the attention of authorities through the Financial Industry Regulatory Authority. The case is being prosecuted by Assistant U.S. Attorney Ryan M. DiSantis of Ortiz’s Economic Crimes Unit. The forfeiture matters are being handled by Assistant U.S. Attorney Veronica M. Lei.