by Bill Singer
Commodities Trader Falls Into Pit Of Art Fraud
October 31, 2012
Eugenio D. Leo, 30, formerly of Allen, TX, worked as a commodities broker at Compass Financial, Richardson, TX. For some, the whole commodities thing is a tad bland. For Leo, there was an esoteric world of high finance, museums, artwork, and Europe.
According to federal prosecutors, from February to November 2004, Leo induced two individuals to make short-term loans, apparently some $3 million, to European museums, and the loans were supposed to have been secured by artwork worth in excess of the invested sums. One of the two investors sought out by Leo provided a power of attorney enabling Leo to arrange for the short-term loan.
Bill Singer
The loan was fully repaid with interest. Except, you know, the Feds say that wasn't the truth because there was no loan. Purportedly, Leo diverted the investors' funds from the purported loan to the outright purchase of artwork.
Stay with me on this because this take a lot of twists and turns.
Leo diverted the investor's loan money towards the purchase of artwork, then interposed himself as the buyer, then turned around and sold the artwork to the investor (without disclosing his conflicted role) at a premium of over $800,000. Talk about circularity!
One more little nice touch: Jody L. Meyer, 46, formerly of Allen, TX falsely represented to Art Capital Group that Leo owned the sold artwork. Why did Jody Meyer do that? Well, it seems that Leo was attempting to secure a $300,000 collateralized loan from Art Capital Group.
Lovely touch , that - no? You fraudulently induce a victim to invest in a short-term loan to a museum, divert the loan funds to the purchase of artwork, sell the artwork to the defrauded investor as an undisclosed principal, and then, after the conflicted sale is consummated, you secure a loan using the sold art as collateral. Ya got all of that?
Oh, one more little fillip of information. Jody Meyer is Eugenio Leo's wife.
On March 7, 2012, Leo pleaded guilty in federal court in the Northern District of Texas to one count of wire fraud, and Meyer pleaded guilty to one count of mail fraud involving the alleged $3 million fraud. Leo faces 5 years in prison and up to a $250,000 fine or twice the victims' loss. Meyer faces up to 5 years of probation and up to a $250,000 fine or twice the victims' loss.
On October 30, 2012, Leo was sentenced to 5 years in prison and ordered to pay $3,431,750 in restitution; Meyer was sentenced to a 5 years of probation and ordered to pay $431,750 in restitution.
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