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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Wednesday, November 6, 2019

Rockland County Man Charged With Running Multimillion-Dollar Ponzi And Embezzlement Schemes

The Defendant is also Charged with Structuring Offenses

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Peter C. Fitzhugh, the Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, and Philip R. Bartlett, Inspector-in-Charge of the New York Field Division of the United States Postal Inspection Service (“USPIS”), announced today the unsealing of an Indictment in Manhattan federal court charging RULESS PIERRE with securities fraud, wire fraud, and structuring charges.  The Indictment alleges that PIERRE engaged in two separate fraud schemes.  In the first scheme, PIERRE, as the owner of his own consulting firm, R. Pierre Consulting Group LLC (“RPCG”), solicited money from investors by falsely promising them that he would earn a 20% return on their initial investment every 60 days through stock trading.  In truth and in fact, PIERRE lost most of the money he traded on behalf of his investors, while falsely reporting to investors that their funds were growing as promised.  Also contrary to his representations, PIERRE secretly used investor funds to purchase luxury vehicles and even a fast food franchise for himself.  He also used funds from new investors to make payments to other investors to avoid his scheme being detected.  Through his lies, PIERRE obtained over $2 million from over 100 investors.  In the second scheme, PIERRE defrauded his former employers, two hotels, by regularly embezzling funds out of bank accounts belonging to those hotels and then depositing those funds through structured transactions, into bank accounts PIERRE controlled.  In total, PIERRE stole over $400,000 from the hotels.  PIERRE was arrested yesterday in Nanuet, New York, and will be presented this afternoon before Chief Magistrate Judge Gabriel W. Gorenstein in Manhattan federal court. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Ruless Pierre engaged in two separate schemes.  In one scheme, Pierre allegedly promised an improbable 20% return on investors’ money, every 60 days, through stock trading.  In reality, Pierre’s stock trading consistently generated losses for investors, and Pierre secretly used investors’ funds for his own personal use, including the purchase of luxury cars and even a fast food franchise.  In another scheme, Pierre simply stole money from his former employers, brazenly moving money from their bank accounts to his personal bank accounts.  Thanks to the outstanding efforts of our law enforcement partners, Pierre’s schemes have come to an end, and he now faces serious time in federal prison.” 

Special Agent-in-Charge Fitzhugh said:  “It is alleged Pierre perpetrated a securities fraud and embezzlement scheme that swindled investors out of millions of dollars and misappropriated even more from his employers’ business.  He then flashed his illicit gains by buying high-end luxury vehicles and his own fast food franchise.  Pierre’s deceptive business practices left more than a hundred victims in its wake, but HSI and its law enforcement partners have put an end to his criminal acts, leaving him to face the consequences for his actions.”

Inspector-in-Charge Bartlett said:  “Mr. Pierre used his ties to the Haitian community, his trusted reputation in that community, and convincing pitch to target and cheat hundreds of victims in an illegal Investment Ponzi scheme. Postal Inspectors remind consumers if an investment promises unusually high returns, it’s likely bogus. Don’t let greed override common sense.”

As alleged in the Indictment unsealed today in Manhattan federal court:[1]

The Investment Fraud Scheme

From at least November 2016 through October 2019, PIERRE solicited money from investors of RPCG by falsely promising them that he would earn a 20% return on their initial investment every 60 days through stock trading.  The investments were memorialized in documents known as “Investment Promissory Notes.”  These investment contracts generally promised that the investor would be paid 20% interest every 60 days and that the investor could withdraw all funds from the investment with 30 days’ notice.  Based on these documents and the false representations of PIERRE, the investors understood that their principal and interest were guaranteed.   

During the course of the investment fraud scheme, PIERRE fraudulently obtained at least $2,049,230 from over 100 investors.  After receiving money from investors, PIERRE deposited the money into one of his personal bank accounts or bank accounts of RPCG.  PIERRE then transferred the money to trading accounts, where he engaged in unprofitable day trading.  From November 2016 through February 2019, PIERRE’s day trading generated approximately $1.4 million in losses.  Despite these losses, PIERRE repeatedly and falsely represented to investors, including in investment statements containing fictitious balances, that the trading was profitable and that their investments were growing as promised.  In addition to simply losing their money, PIERRE also used investors’ funds to purchase luxury vehicles and a fast food franchise for himself.  Additionally, PIERRE further concealed the truth from investors by using money obtained from new investors to make redemption payments to previous investors, in Ponzi-like fashion.

The Embezzlement Fraud Scheme

In the second scheme alleged in the Indictment, PIERRE is charged with embezzling money from his former employers.  From approximately 2007 until February 2016, PIERRE was the director of finance for two different hotels, which were owned by the same company (“Company-1”).  One hotel was located in the Palisades, New York (“Hotel-1”), while the other was located in Armonk, New York (“Hotel-2”) (collectively, “the Hotels”).  As the director of finance, PIERRE was the signatory on several bank accounts held in the name of the management company that managed the Hotels (“Management Company-1”). 

In February 2016, Company-1 sold Hotel-1, and the management of Hotel-1 was transferred from Management Company-1 to another management company (“Management Company-2”).  Subsequently, Management Company-2 opened new bank accounts to operate Hotel-1 (the “New Operating Accounts”).  However, the Legacy Operating Accounts for Hotel-1 remained open until in or about 2019.  PIERRE took advantage of the existence of the Legacy Operating Accounts, and his position as director of finance for Hotel-1, by regularly writing checks payable to “cash” or “petty cash” from one of Hotel-1’s Legacy Operating Accounts.  PIERRE generally wrote the checks for under $10,000 in order to avoid triggering the filing of currency transaction reports for transactions in excess of $10,000.  PIERRE continued to work for Hotel-1 as the director of finance from February 2016 through August 2018.

In 2017, the management of Hotel-2 was transferred from Management Company-1 to Management Company-2.  PIERRE stopped working for Hotel-2 in February 2016, before it changed management.  Nevertheless, after PIERRE’s employment with Hotel-2 ended, he regularly transferred money from the Legacy Operating Accounts of Hotel-2 to the Legacy Operating Accounts of Hotel-1.  PIERRE then wrote himself checks payable to cash from those funds.    

PIERRE continued using the Legacy Operating Accounts for Hotel-1 and Hotel-2 even after his employment with Management Company-2 terminated in or about August 2018, thus ending his association with either Hotel.  For example, from August 2018 through March 2019, PIERRE wrote approximately 94 checks to “cash” or “petty cash” from one of the Legacy Operating Accounts for Hotel-1, for a total of approximately $403,890.  The memo lines for the checks falsely stated that the checks were “reimbursements” connected to Hotel-1.

In addition, from March 2017 through 2019, PIERRE deposited large amounts of cash into his personal bank accounts in amounts that were generally less than $10,000.  The deposits were conducted at various bank locations and typically took place on the same day, consecutive days, or within a short period of time.  For example, in just seven months, from June 2018 through December 2018, PIERRE deposited approximately $225,612, through 138 cash deposits all under $10,000, into a bank account in the name of RPCG.

PIERRE, 50, of Nanuet, New York, is charged with one count of securities fraud, which carries a maximum sentence of 20 years in prison, one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of structuring, which carries a maximum sentence of five years in prison.  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.

Anyone with information about the crimes charged in the Indictment should call the United States Attorney’s Office at 866-874-8900.

*                      *                      *

Mr. Berman praised the investigative work of Homeland Security Investigations.  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 Jordan Estes and Robert L. Boone are in charge of the prosecution.

The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

 

[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

Press Release Number: 
19-366
Updated November 6, 2019