Compliance

DOL Says Ponzi Scheme Included Employee Benefit Plan

The founder of an investment company has pleaded guilty and been sentenced.

By Rebecca Moore editors@plansponsor.com | July 12, 2017

A multi-agency federal and state investigation has led to the guilty plea and imprisonment of an Ohio businessman who orchestrated a Ponzi scheme that included the theft of $1.9 million from an employee benefit plan, according to the Department of Labor (DOL).

The Department’s Employee Benefit Security Administration (EBSA) joined the federal investigation in November 2014 due to an employee benefit plan investments. The founder of Midwest Green Resources pleaded guilty to conspiracy to commit mail and wire fraud and theft or embezzlement from an employee benefit plan in February of this year.

The EBSA investigation revealed that a benefit plan, covered by the Employee Retirement Income Security Act (ERISA), invested roughly $1.9 million of plan assets from July 2010 through December 2011 in the investment company, Midwest Green Resources. Within days of the investment, the founder diverted the plan assets for his and his wife’s personal use, the use of other entities controlled by him, and to pay previous investors, including personal investments of plan participants. In August of 2012, plan participants received investment payouts from certain monies received from other Midwest Green Resources investors not related to the plan. 

His wife operated several companies in the area that were allegedly funded by the Ponzi scheme. He and his wife were indicted in October 2015. Over the course of at least five years, the couple and others orchestrated a Ponzi scheme in the Dayton, Ohio, area in which nearly 480 investors lost more than $20 million. The founder of Midwest Green Resources received $70 million in investment funds in total, including $1.9 million in plan assets. He has been ordered to pay more than $32 million in restitution.

His wife pleaded guilty to one count of mail fraud on April 4, 2017, and is scheduled for sentencing on August 2, 2017.

More information is here.

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