Tuesday, February 16, 2010

Tenth Circuit Affirms 310 Year Sentence For Forty Million Dollar Ponzi Scheme

In Lewis v. U.S. and Schmidt v. U.S. (08-1170 & 08-1171), the Tenth Circuit affirmed the conviction (with a small exception) of two ponzi schemer's in Colorado.  The ponzi scheme lasted four years and resulted in a loss of forty million to the investors.  For the forty million dollar scheme, one was sentenced to 310 years in prison (reduced from 330 years) and the other 360 months in prison.  The court stated:
Norman Schmidt and Charles Lewis conducted a Ponzi scheme through a number of ostensible investment companies (the “scheme companies”). Prospective investors were told that they would be participating in an exclusive program that purchased high-yield notes whose principal was guaranteed by reputable insurers. But their money was never used to purchase such notes. Rather, funds from new clients were used to pay the operators of the scheme and to pay off earlier investors. The scheme, which lasted from April 1999 until late 2004, resulted in estimated losses to investors of more than $40 million....Schmidt was convicted on one count of conspiracy, five counts of mail fraud, six counts of wire fraud, twelve counts of securities fraud, and thirteen counts of money laundering (and acquitted on five counts). He was sentenced to 330 years’ imprisonment. Lewis was convicted on one count of conspiracy, two counts of mail fraud, one count of wire fraud, five counts of securities fraud, and one count of money laundering (and acquitted on 12 counts), and was sentenced to 360 months’ imprisonment.
The opinion can be viewed HERE.


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