Former Wall Street Broker Sentenced to Five Years' Jail For Ponzi Scheme 2

Former Wall Street Broker Sentenced to Five Years’ Jail For Ponzi Scheme

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ponzi scheme

Audrey Strauss, Acting United States Attorney for the Southern District of New York, announced that PAUL A. RINFRET was sentenced in Manhattan federal court today to 63 months in prison for participating in a Ponzi scheme in which he obtained approximately $19 million in total from victims through a variety of lies and misrepresentations.  RINFRET pled guilty to one count of wire fraud and one count of securities fraud on October 8, 2019, before U.S. District Judge Gregory H. Woods, who also imposed today’s sentence.

Acting Manhattan U.S. Attorney Audrey Strauss said:  “Today, Paul Rinfret was brought to justice for callously lying to investors.  Rinfret told investors his investment returns were excellent, when in fact he failed to invest investor funds as promised, generated losses when he did invest, and diverted the majority of investor funds to his personal use and to repay investors in a Ponzi-like fashion.  We will continue to aggressively pursue frauds like this one, which caused millions of dollars in losses, in order to preserve investor confidence in our capital markets.”

According to the allegations contained in the Complaint and the Indictment:

From at least 2016 through 2019, RINFRET engaged in a scheme to defraud potential and actual investors in an entity called Plandome Partner s L.P. for his own personal gain and for the gain of his family members.  RINFRET offered potential investors the ability to invest in Plandome Partners through the purchase of limited partnership interests.  In soliciting investments, RINFRET falsely represented to potential and actual investors (the “Victims”) that he would use all of their investment funds to trade futures contracts tied to the Standard & Poor’s 500 index using a propriety trading algorithm he had developed, taking for himself a fee equivalent to 25% of the net profits on the trades. 

Through his fraudulent scheme, RINFRET obtained approximately $19 million in total from approximately six Victims on the false claim that he would utilize their investment funds for trading.  RINFRET’s lies and misrepresentations were varied and many.  For example, RINFRET claimed that Plandome Partners traded through certain brokerage accounts, one of which simply did not exist, and two of which were not open at a time when RINFRET claimed to be trading in those accounts. 

Further, RINFRET used only a small portion of the Victims’ invested funds to engage in actual trading.  Instead, RINFRET used most of the Victims’ money to purchase luxury goods and high-end vacation rentals for himself and family members.  For example, RINFRET used the Plandome Partners account to spend almost $50,000 on a luxury Hamptons vacation rental, more than $40,000 on jewelry, and tens of thousands of dollars on the event venue where his son held his engagement party. 

When RINFRET did actually engage in trading with Victims’ funds, he generated losses.  But, to prevent his Victims from seeking a return of their money, and to induce additional investments, RINFRET falsely reported excellent investment performance results to the Victims through false and fraudulent monthly account statements that RINFRET typically emailed to the Victims.  RINFRET also sent fabricated brokerage account statements to the Victims. 

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In addition to the prison term, RINFRET, 71, of Manhasset, New York, was sentenced to two years of supervised release, ordered to pay forfeiture in the amount of $20,268,268, and to pay $12,290,803 in restitution to his victims.

            Ms. Strauss praised the investigative work of Homeland Security Investigations and also thanked the Securities and Exchange Commission for its assistance in the investigation.

            The prosecution of this case is being overseen by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorney Robert L. Boone is in charge of the case. 

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