Criminal Securities Fraud: Jury Convicts Former NJ Investment Manager Over $10M Ponzi Scam and Wilmington Trust Executives Get Prison Term of Six Years

In federal court in New Jersey, a jury has found former investment manager Vincent P. Falci guilty of securities fraud and multiple counts of wire fraud related to a $10B Ponzi scam that defrauded over two hundred of his former clients, including Falci’s own relatives, friends, business associates, police officers, and firefighters. Falci was formerly the fire chief in Middletown, NJ.

According to a statement by the US Justice Department, Falci convinced his clients to invest in Vicor Tax Receivables, LLP and the Saber Funds, both of which were under his control. The Saber Funds were supposed to be low risk while offering high returns. Instead, Falci diverted $10M in investors’ money either to himself, his family, and companies he ran or into more high-risk investments, including real estate and day trading, both of which led to losses.

Falci is accused of hiding the losses and fraud. He did this through fake monthly statements showing investors that they were making money, which is why clients continued to work with him. Meantime, he stole from the Vicor Funds to pay Saber Funds investors their returns that they were promised.

The fraud conviction comes three years after Falci entered into a consent order with the New Jersey Bureau of Securities in which he had to pay over $6.7M in restitution. In that parallel civil case, the former investment manager admitted that not only did he mislead investors, but also, he paid himself and his family more than $1M.

Investors, meantime, have filed an over $40M fraud lawsuit over Falci’s Ponzi scam. Former fund administrator Apex Fund Services Inc. had sought to force arbitration or get the complaint tossed out, but a NJ state judge refused to dismiss the lawsuit. The investors claim that they were bilked of about $14M and they want three times that back in damages. Although Falci was the fraud mastermind, they believe that this scam could not have taken place without Apex’s involvement.

Two Ex-Wilmington Trust Execs Receive Prison Terms for Scam That Defrauded Bank’s Shareholders

In Delaware, a US District Court judge sentenced former Wilmington Trust President Robert VA Harra and ex-bank CFO David Gibson to six years in prison each. The two men also must each pay a $300K fine and a $100 special assessment for every felony count that they were convicted for, as well as serve three years of supervised release after they get out of prison.

Harra, Gibson, and two other former Wilmington Trust executives, ex-Chief Credit Officer William B. North and ex-Controller Kevyn Rakowski, were accused of engaging in fraudulent actions to hide hundreds of millions of dollars in commercial real estate loans that were past due in 2009 and 2010. The fraudulent reporting caused many to sustain losses, including investors who got involved in a more than $270M stock offering in 2010.

When Wilmington Trust’s debt burden was disclosed, it began to fail. This led to M & T Bank Corp. buying Wilmington Trust at a huge discount in 2011. Stockholders, meantime, sustained huge losses as M & T bought Wilmington’s stock at 71% less than what many investors had paid during the $270M stock offering.

Over the years, Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) has helped thousands of investors in getting back their money lost due to financial fraud. You want to work with experienced investor fraud lawyers. Contact SSEK Law Firm today.