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Department of Justice
U.S. Attorney’s Office
Northern District of Ohio

Wednesday, July 5, 2017

Boardman man sentenced to nearly five years in prison for defrauding investors out of nearly $1.2 million

A Boardman man was sentenced to nearly five years in prison for defrauding investors out of nearly $1.2 million and related tax violations, said Acting U.S. Attorney David A. Sierleja, Stephen D. Anthony, Special Agent in Charge of the FBI and Ryan L. Korner, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office

George N. Krinos was sentenced to 57 months in prison. U.S. District Judge Dan Aaron Polster ordered Krinos to pay $1.1. million in restitution to the victims and $177,000 in restitution to the IRS.

Krinos previously pleaded guilty to a one count each of engaging in a securities fraud scheme and willfully failing to collect and pay taxes for his employees.

Krinos, through his various companies known as Krinos Holdings, engaged in a securities fraud scheme in which he sold through false and deceptive practices securities to numerous victims in Ohio. These securities consisted of debenture notes and private placement memoranda that were not properly registered with the Securities and Exchange Commission. Because the securities were not registered with and therefore subject to greater scrutiny by the SEC, Krinos was limited to selling them to “accredited investors” who were generally individuals having a net worth in excess of $1 million or who met specific, high-dollar income thresholds, according to court documents.

From 2011 through 2014, Krinos sold these unregistered securities to at least 10 investors in Ohio, causing them financial losses. Krinos sold the securities under the pretense that his investors’ funds would be used for legitimate business purposes, including to provide venture capital to various client companies seeking funding from Krinos Holdings. Rather than use these funds for their intended uses, Krinos instead used the money for personal expenses and to engage in unauthorized foreign currency transactions. To entice his victims, Krinos made promises that their initial investments of $.10 per share would rise in value to as much as $5 or $6 per share. Krinos also falsely told investors and others that he managed approximately $600 million in an investment account when he in fact had only $5 in the account, according to court documents.

Krinos submitted falsified letters and statements to reflect high balances in his accounts. Krinos also falsely told investors that they were making high returns on their investments and that his relationships with the client companies was on good terms. Contrary to his representations to his investors, Krinos actually used their funds on for his own personal use at restaurants, bars, casinos, adult entertainment clubs and hotels. Rather than disclose these personal expenses, Krinos later characterized them as “sales and marketing” costs in a budget given to his shareholders at a meeting in Boardman, in 2013, according to court documents.

Krinos also improperly withheld taxes, including federal income taxes and Federal Insurance Contribution Act taxes from his employees without paying over those taxes to the IRS. Over the course of approximately two years, Krinos improperly withheld and kept approximately $91,495 of his employees’ tax contributions from the IRS, according to court documents.

“This defendant lied to investors as means to funding a lavish lifestyle for himself,” Sierleja said.

“George Krinos left several investors in financial peril and created a recipe for devastation that could last a lifetime,” Korner said. "Additionally, employment tax fraud results in the loss of tax revenue to the United States government and the loss of future Social Security or Medicare benefits for the employees."


This case is being prosecuted by Assistant U.S. Attorneys Om Kakani and Robert J. Patton, following an investigation by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigations.

Financial Fraud
Mike Tobin 216.622.3651
Updated July 5, 2017