A fund manager from St. James, New York, was arrested and charged with running a $17 million Ponzi scheme, according to federal authorities. James M. Peister, 74, was taken into custody and is facing a five-count indictment in federal court.
The indictment alleges that between January 2000 and June 2009, Peister raised more than $17 million from at least 74 investors in connection with an investment fund that he managed. However, instead of investing the money as promised, Peister misappropriated it to run a Ponzi scheme.
According to the indictment, Peister used the investors’ money to pay millions of dollars in redemptions to his victim investors to keep the Ponzi scheme afloat and to purchase luxury items, including an expensive estate in St. James and a Hummer luxury vehicle.
To avoid detection and continue the scheme, Peister sent phony account statements to investors that falsely showed that their funds were invested and performing well. He also submitted bogus financial statements to the investment fund’s independent auditor, causing the auditor to overstate the value and profits of the investment fund to the victim investors.
As a result, investors believed that the funds were performing satisfactorily, and they continued to invest their money with Peister. However, the Ponzi scheme collapsed in the wake of the financial crisis in 2008, when Peister could no longer keep up with demands for redemptions from nervous investors.
Peister’s Ponzi scheme is a classic example of a house of cards built on lies and deceit. The defendant is in custody and will be arraigned this afternoon before United States District Judge Joseph F. Bianco at the United States Courthouse in Central Islip, New York.
The charges against Peister are securities fraud, wire fraud, and mail fraud, each carrying a maximum sentence of 20 years’ imprisonment and fines of up to $5,000,000, $250,000, and $250,000 respectively.
Defendant: James M. Peister
Criminal Charges: Securities, Wire, and Mail Fraud
City and State: St. James, New York
Date: January 2000 to June 2009
Sentence: If convicted, Peister may face up to 20 years’ imprisonment and fines of up to $5,000,000, $250,000, and $250,000 respectively.
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Key Facts
- State: New York
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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