A New York-based jewelry wholesaler has pleaded guilty to running a $200 million Ponzi scheme that targeted police officers and firefighters, among others, according to the US Justice Department and the US Securities and Exchange Commission (SEC).
Gregory Altieri pleaded guilty to wire fraud and securities fraud for his part in lying to investors about inflated returns for wholesale jewelry deals that didn’t exist. Altieri faces up to 20 years in prison.
The SEC, which conducted a parallel investigation to that of the Eastern District of New York, said Altieri raised more than $69 million from at least 80 investors by allegedly falsely claiming that the investments would be used to acquire jewelry for LNA Associates, a business operated by Altieri’s company.
According to the SEC’s complaint, Altieri began soliciting current and retired police officers and firefighters in August 2017. He was able to reach out them because of a relationship he had with a retired police officer who also became an investor. Altieri told current and retired police officers and firefighters that he was offering them the investment opportunity in LNA because of their status as first responders.
Altieri allegedly guaranteed prospective investors investment returns within 30 and 150 days that ranged from approximately 30% of their initial investment to over 100%. Altieri also told prospective investors that their investments were safe and that all prior investors had been repaid their principal investment and their promised profit.
However, the SEC said that instead of using investor funds to acquire jewelry, Altieri used the vast majority of the funds to “perpetuate and conceal the fraudulent scheme,” using money from new investors to pay earlier investors. He also allegedly used investor funds to pay his personal expenses. For example, Altieri allegedly used more than $500,000 of LNA’s funds to pay for family vacations, personal credit card charges, his mortgage, home utilities, his children’s college tuition, a car lease, groceries, health insurance, and medical and dental bills for his family.
“As alleged in the complaint, Altieri defrauded current and former first responders and other investors who thought they were making safe investments,” Richard Best, director of the SEC’s New York Regional Office, said in a statement. “We will continue to diligently pursue those who prey on investors and abuse their trust.”
The SEC has charged Altieri with violations of the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934, and seeks injunctive relief, disgorgement plus prejudgment interest, and civil penalties.
“Altieri assured investors that the business was legitimate, that the business was running smoothly, that the jewelry had been purchased and sold, that the investors would be paid in full, and that the delays in payment were being caused by the jewelry brokers and dealers,” the SEC stated in its complaint. “None of these statements was true.”