A Dubious Gem of an Idea
On June 15, 2010, 63-year-old Samuel Solanky, a/k/a "Samee" Solanky, pleaded guilty to one count of wire fraud in connection with a scheme by which he caused individuals to invest approximately $3 million in a non-existant jewelry business. Solanky also agreed to a $3 million forfeiture.
According to information released by Preet Bharara, the the United States Attorney for the Southern District of New York, Solanky was a pastor who had a religious show on cable television known as "Vandana," which was broadcast in the New York City metropolitan area and elsewhere.
From in or about June 2005 through in or about July 2009, the Solanky engaged in a scheme where he solicited investments from individuals by telling them that he would use their investments to purchase gem stones in India that would be sold to jewelers in the United States. Solanky promised victims that they would receive 100% returns on their investments within a matter of months. Solanky solicited potential investors in part through the religious organizations in which he was involved.
In fact, Solanky did not operate a jewelry business and the money obtained from the victims was not used to purchase gem stones; rather, the victims' money was diverted for Solanky's own use (often wired to various foreign entities or to be withdrawn as cash or through checks payable to the defendant or to "cash." )
Solanky faces a maximum term of imprisonment of 20 years and a maximum fine of $250,000 (or twice the gross gain or loss resulting from the crime), and is scheduled to be sentenced by United States District Judge Stephen C. Robinson on September 29, 2010.
Readers of this column may recall a recent scam involving another jeweler: Diamond Dust: Prominent Cuban-American Florida Jeweler Named in Affinity-Fraud Ponzi Scheme http://www.brokeandbroker.com/index.php?a=blog&id=437
"Your Money" Is "My" Money
In a similarly disturbing case, on June 15, 2010, 44-year-old Gregg T. Rennie, a Quincy, Massachusetts financial advisor who hosted the "Your Money" radio talk show, was sentenced by U.S. District Judge Edward F. Harrington to seven years imprisonment, to be followed by three years of supervised release and order to pay $3,786,685.42 in restitution.in federal court for stealing over $3 million from clients, listeners to his radio program and friends.
According to materials released by United States Attorney Carmen M. Ortiz, Rennie stole almost four million dollars from various victims, including
Rennie solicited his victims to investment in what he described as risk free federal housing certificates with guaranteed rates of return. Investors were told that these investments involved government grants or loans for housing projects, or were otherwise investments in federally subsidized real estate developments.
Rennie persuaded other victims to invest funds in annuity products that he claimed offered guaranteed rates of return.
However, Rennie did not invest his victims' money in the products he described. Rather, he used the funds to pay for his business expenses and, on occasion to make periodic payments to other victims. To conceal his fraud, he showed some of his victims prospectuses for legitimate investment vehicles from respected investment companies. After his victims had invested, Rennie sent his victims bogus invoices which appeared to reflect their investments. These documents, however, bore no relation to the actual manner in which Rennie spent his victims' money.
On January 23, 2009, the Securities and Exchange Commission (SEC) filed a civil injunctive action against Rennie based on similar conduct. According to the SEC's complaint, from early 2007 through early 2009, Rennie made misrepresentations to several of his clients about investing their money in risk-free "federal housing certificates" that paid up to 12% per year, tax free, and were offered by a real estate investment company based in Boston. In fact, the investments were completely fictitious and Rennie had no relationship with the real estate investment company whose name he used.
The SEC alleged that Rennie used investor proceeds to pay personal expenses, including a gym membership and liquor, grocery, shoe and department store purchases, and withdrew thousands of dollars in cash from the account where investor funds were sent.
On May 18, 2009, the SEC obtained a final judgment by default against Rennie in which he was enjoined from future violations of the securities laws and ordered to pay disgorgement in the amount of $3,678,377in profits plus prejudgment interest in the amount of $30,653, and a penalty of $500,000.
On May 29, 2009, the SEC instituted administrative proceedings against Rennie based on the entry of the final judgment by default in the civil injunctive action to determine what, if any, remedial action was appropriate and in the public interest.
On August 12, 2009, Administrative Law Judge James T. Kelly issued an order by default barring Rennie from association with any broker or dealer or investment adviser.