Multi-agency investigations, which included the FBI and the Labor Department, into Ponzi schemes involving retirement accounts have landed two men in prison.
Labor’s Employee Benefits Security Administration announced Wednesday that a fraud investigation by EBSA, the FBI and the Department of Health and Human Services’ Office of Inspector General has resulted in a 12-year prison sentence for an Arkansas man who diverted at least 25 clients’ investments for his personal use.
Another multi-agency federal and state investigation has led to the guilty plea and imprisonment of Ohio businessman William M. Apostelos, who orchestrated a Ponzi scheme that included the theft of $1.9 million from an employee benefit plan. The prosecution was led by the Justice Department.
The investigation of William Jackson Moates Jr., of Fort Smith, Arkansas, found that over the course of nearly five years, Moates, 50, received investment funds from at least 25 different clients, which were not invested as Moates said they would be.
“Moates diverted clients’ investments to his personal use, to pay back other investors, and for the use of his various businesses for operating expenses,” according to EBSA.
EBSA investigators found that Moates had embezzled $150,000 from an employee benefit plan sponsored by a pool company.
Moates used investor funds for home renovations, vacations, credit card payments, payments to personal iTunes and Amazon accounts and contributions to local charities, as well as mortgage payments.
EBSA said he also used investor funds to make disbursements to other clients whose money he had embezzled.
On June 28, Moates was sentenced to 12.5 years in federal prison on one count each of mail fraud, theft of government funds, theft from an employee benefit plan, money laundering and two counts of wire fraud. He was also ordered to pay $5.7 million in restitution to his victims.
The FBI, IRS and the OIG began investigating Ohio businessman Apostelos, 55, in October 2014, and EBSA joined the investigation in November 2014, based on employee benefit plan investments.
Apostelos pleaded guilty to conspiracy to commit mail and wire fraud and theft or embezzlement from an employee benefit plan in February.
According to the EBSA, Apostelos and his wife, Connie, were indicted in October 2015.
“Over the course of at least five years, the couple and others orchestrated a Ponzi scheme in the Dayton area in which nearly 480 investors lost more than $20 million. Apostelos received $70 million in investment funds in total, including $1.9 million in plan assets,” EBSA said.
Connie Apostelos pleaded guilty to one count of mail fraud on April 4, 2017, and is scheduled for sentencing on Aug. 2, 2017.
William Apostelos has been ordered to pay more than $32 million in restitution.
“This case shows what can be accomplished when state and federal agencies work together on the behalf of American taxpayers,” said the director of the EBSA Cincinnati Regional Office, Joe Rivers, in a statement. “Workers and employers invest far too much time, effort and money into saving for the future for criminals to come along and defraud retirement plans.”