Former Wall Street Trader Charged In Manhattan Federal Court For Ponzi Scheme
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations, announced today the unsealing of a Complaint in Manhattan federal court charging PAUL A. RINFRET with securities fraud and wire fraud charges. The Complaint alleges that RINFRET engaged in a years-long scheme to defraud investors by selling limited partnership interests in an entity through which RINFRET purported to trade in futures contracts relating to the S&P 500 utilizing a bespoke algorithm he had developed. RINFRET allegedly touted extremely high returns on his trading. In truth and in fact, as alleged, RINFRET simply stole most of the investors’ money in order to fund his lavish lifestyle. RINFRET was arrested this morning in Manhasset, New York, and will be presented this afternoon before Magistrate Judge Robert W. Lehrburger in Manhattan federal court.
Manhattan U.S. Attorney Geoffrey S. Berman said: “As alleged, Paul Rinfret deceived investors at every step: He lied about his past returns to get them to invest. He lied about having invested all of their money, when he was actually spending much of it on things like jewelry, cars, and a Hamptons vacation home. He lied about how their money was growing. His alleged lies stop today. We will work tirelessly with our law enforcement partners to stop this kind of alleged Ponzi scheme in its tracks and bring defendants like Rinfret to justice.”
Special Agent-in-Charge Melendez said: “As alleged, Paul Rinfret willfully and continually defrauded his investors, the very people he was tasked with serving, in a multimillion-dollar Ponzi scheme that served to enrich only him. The special agents of our El Dorado Task Force will continue to expose such fraud at the national and international levels and assure that such financial predators are brought to justice.”
As alleged in the Complaint unsealed today in Manhattan federal court:
From at least 2016 through 2019, RINFRET engaged in a scheme to defraud potential and actual investors in an entity called Plandome Partners L.P. for his own personal gain and for the gain of his family members. RINFRET offered potential investors the ability to invest in Plandome Partners through the purchase of limited partnership interests. In soliciting investments, RINFRET falsely represented to potential and actual investors (the “Victims”) that he would use all of their investment funds to trade futures contracts tied to the Standard & Poor’s 500 index using a propriety trading algorithm he had developed, taking for himself a fee equivalent to 25% of the net profits on the trades.
Through his fraudulent scheme, RINFRET obtained more than $19 million in total from approximately six Victims on the false claim that he would utilize their investment funds for trading. RINFRET’s lies and misrepresentations were varied and many. For example, RINFRET claimed that Plandome Partners traded through certain brokerage accounts, one of which simply did not exist, and two of which were not open at a time when RINFRET claimed to be trading in those accounts.
Further, RINFRET used only a small portion of the Victims’ invested funds to engage in actual trading. Instead, RINFRET used most of the Victims’ money to purchase luxury goods and high-end vacation rentals for himself and family members. For example, RINFRET used the Plandome Partners account to spend almost $50,000 on a luxury Hamptons vacation rental, more than $40,000 on jewelry, and tens of thousands of dollars on the event venue where his son held his engagement party.
When RINFRET did actually engage in trading with Victims’ funds, he generated losses. But, to prevent his Victims from seeking a return of their money, and to induce additional investments, RINFRET falsely reported excellent investment performance results to the Victims through false and fraudulent monthly account statements that RINFRET typically emailed to the Victims. RINFRET also sent fabricated brokerage account statements to the Victims.
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RINFRET, 70, of Manhasset, New York, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of securities fraud, which carries a maximum sentence of 20 years in prison. The statutory maximum and minimum 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.
Anyone with information about the crimes charged in the Complaint should call the United States Attorney’s Office at 866-874-8900.
Mr. Berman praised the investigative work of the New York Field Office of Homeland Security Investigations. He also thanked the Newark Field Office of Homeland Security Investigations, under the direction of Special Agent-in-Charge Brian Michael. Mr. Berman also thanked the United States Postal Inspection Service, the United States Internal Revenue Service, the New York City Police Department, and the New York City Sherriff’s Office, which assisted in the investigation. Mr. Berman also thanked the Securities and Exchange Commission, which has brought and filed a civil enforcement action against the defendant.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Robert L. Boone and Amanda Kramer are in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
 As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.