Investment scam artist David Swartz, 59, of Highland Park, Illinois, has been sentenced to 2 years in federal prison for orchestrating a massive investment fraud scheme that bilked a Madison, Wisconsin resident out of hundreds of thousands of dollars.
Swartz, who worked as an unregistered investment advisor and fund manager, had a close personal relationship with Victim-1, a resident of Madison, Wisconsin.
Beginning in January of 2009, Victim-1 made regular and periodic investments into Swartz’s investment fund with the understanding that Swartz was conservatively investing the money.
However, beginning in 2018, Swartz began misrepresenting the performance of the fund to Victim-1, lying about the fund’s performance and inducing Victim-1 to invest an additional $150,000 in February 2020.
On March 7, 2020, Swartz provided a false Schedule K-1 for tax year 2019 to Victim-1 that showed that Victim-1’s net short-term capital gains from his investment in the fund exceeded $500,000.
Victim-1 relied on the falsified document and filed a U.S. Individual Income Tax Return Form 1040 for the 2019 tax year that substantially overreported Victim-1’s capital gains on Schedule D, Line 5.
The charges against Swartz were a result of an investigation conducted by IRS Criminal Investigation, and the prosecution of the case has been handled by Assistant U.S. Attorney Aaron Wegner.
Swartz was sentenced to 2 years in federal prison and ordered to pay $181,915 in restitution to Victim-1.
This case serves as a reminder of the importance of doing your due diligence when investing your hard-earned money.
It’s essential to research the investment advisor or fund manager thoroughly and verify their credentials before entrusting them with your finances.
The consequences of not doing so can be severe, as seen in the case of David Swartz.
Let this be a cautionary tale for anyone considering investing in the stock market or working with an investment advisor.
Verify, verify, verify!
Key Facts
- State: Wisconsin
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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