Charlotte Man Sentenced To More Than 16 Years In Prison For Operating A Ponzi Scheme That Defrauded Investors Of More Than $1.5 Million
United States Attorney Anne M. Tompkins Western District Of North Carolina
Defendant Spent The Stolen Funds On Personal Expenses
CHARLOTTE, N.C. – Sean F. Mescall, 35, of Charlotte, was sentenced today by U.S. District Judge Robert J. Conrad, Jr. to serve 195 months in prison for orchestrating a Ponzi scheme that solicited victims to invest more than $1.5 million dollars in the foreign currency market (FOREX), announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Judge Conrad also ordered Mescall to serve three years under court supervision following his prison term and to pay $1,248,812.09 as restitution to his victims. In December 2012, a federal jury convicted Mescall of securities fraud, wire fraud and money laundering.
North Carolina Secretary of State Elaine F. Marshall and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division join U.S. Attorney Tompkins in making today’s announcement.
According to court documents and today’s sentencing hearing, from 2006 to 2010 Mescall executed a Ponzi scheme by inducing over 119 investors in Charlotte and elsewhere to invest more than $1.5 million in his investment company, “Capitalstreet Financial, LLC” (CSF), falsely representing that their money would be invested in the foreign currency market. Court documents show that Mescall lied to his victims about his professional background and credentials falsely claiming that he was a college graduate with over 20 years of experience trading in FOREX and that he was a former director at Merrill Lynch. Court records indicate that Mescall did not have a college degree, had no relevant trading experience and never worked for Merrill Lynch. Mescall also misled his investors about CSF, claiming that it was a national company with over 35 offices, and that CSF handled over $100 million in trade volume each month. In fact, court records indicate, CSF only operated a boiler room in Charlotte and later in Cornelius, and that it never handled $100 million in trade at any time during the scheme.
Court documents indicate that Mescall lulled his victims into a false sense of security by falsely promising 60% to 80% annual returns on their investments. Court records show that often Mescall’s victims were elderly and the funds they invested were most, if not all, of their life savings. Over the course of the scheme, Mescall only traded $285,908 of the victim’s money, and sustained $271,705 in losses. Mescall used approximately $295,000 to pay some victims supposed “payouts” from profits made on investments. However, court records show that these payments were not based on profits, but came from funds contributed by new investors, commonly referred to as “Ponzi” payments. Mescal simply deposited the rest of the investors’ money into various bank accounts he controlled in the United States and offshore, and used a substantial amount of investor money to pay for personal expenses unrelated to any foreign exchange. For example, court documents indicate that Mescall used investor money to buy, among other things, a BMW, a Ferrari and other cars, a Rolex watch, diamonds and other jewelry, and to make mortgage payments on his Lake Norman residence.
“The defendant seemed to have no sense of the traumas suffered by the victims,” Judge Conrad said in announcing Mescall’s sentence. “These losses were significant, life impacting events because of the defendant’s greed.”
Mescall has been detained since June 2012 and will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.
The case was investigated by the Securities Division of the North Carolina Secretary of State and the FBI.
The prosecution was handled by Assistant U.S. Attorney Kenneth Smith of the Western District of North Carolina.