Manhattan U.S. Attorney And FBI Assistant Director-In-Charge Announce Arrest Of Manhattan Business Owner For Allegedly Running A $1.5 Million 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 Office of the Federal Bureau of Investigation ("FBI"), announced today that JASON J. KONIOR, the founder and manager of a number of related business entities in New York City, collectively referred to as “Absolute,” was arrested today for orchestrating a Ponzi scheme. Through Absolute, KONIOR stole approximately $1,500,000 from three hedge fund investors and used the proceeds to pay off prior investors and to pay himself. He was arrested in Manhattan, and is expected to be presented in Manhattan federal court before United States Magistrate Judge James L. Cott on Wednesday.
According to a Complaint unsealed today in Manhattan federal court:
From late 2011 through May 2012, KONIOR organized and managed a Ponzi scheme in which he misappropriated $1.5 million in funds he had solicited from three hedge fund investors. He represented to these hedge funds that Absolute would provide additional trading funds of up to nine times the investment they made in Absolute. As part of Absolute’s “first loss” investment program, KONIOR claimed that he would place the combined funds – the investors’ funds and the additional funds to be provided by Absolute – in a brokerage account designated by Absolute. According to KONIOR, the hedge fund investors would then be able to trade securities utilizing that brokerage account. Under the arrangement, the hedge funds would be responsible for trading losses, and they would share any profits with Absolute.
Instead of establishing brokerage accounts for the three hedge funds, KONIOR misappropriated the funds they provided by paying redemptions to prior investors, making payments to himself, and paying various personal and business expenses. In e-mails, text messages, and telephone conversations, he pretended that he was establishing brokerage accounts for the three hedge fund investors, when he had already stolen their money. In one case, after he repeatedly failed to set up a brokerage account for one of the hedge funds, the manager of the fund sent him a text message stating, “I want my money back. What did you do to it anyway? Are you going to tell me or do you want the SEC to find out?” KONIOR responded with a text message that said, “[w]e have your funds in our acct. Where else would they be?” At the time he wrote the message, he had already used that hedge fund’s investment to pay off other investors and his own expenses.
KONIOR, 39, of Manhattan, has been charged with one count each of securities fraud and wire fraud. The maximum potential penalty for securities fraud is 20 years in prison and a fine of $5,000,000 or twice the gross gain or loss from the offense. The maximum potential penalty for wire fraud is 20 years in prison and a fine of $250,000 or twice the gross gain or loss from the offense.
Mr. Bharara praised the work of the FBI and the Securities and Exchange Commission.
This case was brought in coordination with President BARACK OBAMA's Financial Fraud Enforcement Task Force, on which Mr. BHARARA serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President OBAMA established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
This case is being handled by the Office's Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys John T. Zach and Jason H. Cowley are in charge of the prosecution.
The charges contained in the Complaint are merely accusations, and the defendant are presumed innocent unless and until proven guilty.