Former Corporate Lawyer Arrested And Charged In Manhattan Federal Court In Connection With Multimillion-Dollar Ponzi Scheme
Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that CHARLES A. BENNETT was arrested this morning on securities and wire fraud charges stemming from his scheme to defraud over 30 investors of more than $5 million through a Ponzi scheme that he perpetrated for more than five years. Among other false and misleading statements, BENNETT lied to investors by claiming to have exclusive access to a highly successful privately held investment fund in which he would purportedly invest the investors’ money. BENNETT solicited millions of dollars from over 30 investors, including his close friends and family members, but never actually invested any of the money in the investment fund or any other investment vehicle. Instead, BENNETT used the investors’ money for his own personal benefit and to pay back other investors.
BENNETT is expected to be presented today before United States Magistrate Judge Kevin Nathaniel Fox.
U.S. Attorney Preet Bharara said: “As alleged, Charles Bennett built a Ponzi scheme with money from friends and family, among others. The scheme, in which he allegedly told lie upon lie, lasted over five years and defrauded investors of over $5 million.”
FBI Assistant Director-in-Charge George Venizelos said: “All attorneys take an oath to deal honestly and promote their client’s best interests. As alleged, Bennett appeared to his clients to be a reputable attorney whom they could trust to invest their hard-earned money. Instead, he breached his oath and leveraged relationships he had with clients, some of whom he identified as close friends and family members, for personal financial gain. The FBI will continue to work with its law enforcement and private sector partners to investigate those whose greed-based schemes rob individuals of their hard-earned money.”
In a separate action, the U.S. Securities and Exchange Commission (“SEC”) announced civil charges against BENNETT.
According to the two-count Complaint unsealed today in Manhattan federal court:
From 2008 through November 2014, BENNETT, a former corporate lawyer at a law firm based in New York City, was engaged in a multimillion-dollar Ponzi scheme, during which he solicited money from investors based on materially false and misleading representations. Specifically, BENNETT told the investors that he himself had invested money in a highly successful privately held investment fund, and that, should they choose to invest, the investors’ money would be held in BENNETT’s account. BENNETT communicated by email and telephone with many of the investors in order to tell them about the purported status of their investments, including their purported returns. BENNETT also led most of the investors to believe that they were the only individuals to whom he had extended the offer to invest with him.
BENNETT created false and misleading paperwork in furtherance of the scheme, including “promissory notes” that he provided to the investors as a record of the amounts of money they had given to BENNETT to invest. BENNETT also provided certain investors with account statements that purported to show the amount that BENNETT (and the investors, through BENNETT) had invested. In fact, BENNETT never invested any of the investors’ money in the investment fund or in any other investment vehicle, but instead spent the money on his own personal expenses and to repay other investors.
During the course of the fraudulent scheme, BENNETT solicited more than $5 million from more than 30 investors.
BENNETT, 56, of Manhattan, is charged with one count of wire fraud and one count of securities fraud. The securities fraud count and the wire fraud count each carry a maximum sentence of 20 years in prison; and the charges carry a maximum fine of $5 million, or twice the gross gain or loss from the offense. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the work of the Federal Bureau of Investigation, and thanked the SEC for its assistance. He added that the investigation is continuing.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Amy Lester is in charge of the prosecution.
The allegations contained in the Complaint are merely accusations, and the defendant is
presumed innocent unless and until proven guilty.