A California Ponzi scheme suspect accused of defrauding investors out of about $35 million tried to elude FBI capture on Monday by entering Lake Shasta with a Yamaha Seascooter, according to McGregor W. Scott, U.S. Attorney for the Eastern District of California in Sacramento.
The suspect, Matthew Piercey, 44, of Palo Cedro, California, was arrested after he emerged from the water, Scott said.
“When law enforcement agents attempted to arrest Piercey today, he fled from arrest by leading agents on a vehicle chase through residential neighborhoods and then onto the highway before abandoning his vehicle,” Scott said.
“Piercey abandoned his truck near the edge of Lake Shasta, pulled something out of it, and swam into Lake Shasta,” according to a detention memo filed Monday in U.S. District Court for the Eastern District of California.
He “spent some time out of sight underwater where law enforcement could only see bubbles [and] remained in the frigid water for approximately 25 minutes,” the memo said. “When Piercey finally emerged from the lake, law enforcement discovered that he had a Yamaha 350LI underwater submersible device.”
The arrest came after a grand jury returned an indictment on Nov. 12, alleging Piercey, the founder of investment companies Family Wealth Legacy and Zolla, ran a $35 million fraud scheme. After his arrest, he was charged with wire fraud, mail fraud, money laundering and witness tampering, Scott said. The indictment was unsealed Monday, following his arrest.
Kenneth Winton, 67, of Oroville, California, was charged separately by criminal information with conspiracy to commit wire fraud.
From about July 2015 through August 2020, Piercey carried out his investment fraud scheme, using Family Wealth Legacy and Zolla to solicit funds from investors using various false and misleading statements, including about trading algorithms, the success of the companies’ investment strategies, and the liquidity of investments, according to the indictment.
As an example, Piercey solicited investor money for an “Upvesting Fund” that allegedly was an algorithmic trading fund with a history of success, but he admitted privately to an associate there really was no Upvesting Fund, according to the indictment.
Piercey initially recruited Winton as an investor, then to assist with raising investor funds, and finally to take on management responsibilities at Zolla, Scott alleged. From 2018 to 2020, Winton conspired with Piercey and made several false and misleading statements to investors, including about the success of Zolla’s investment strategies, the reasons for delays in payment to investors, and the current location, value and nature of Zolla investments, Scott claimed.
Piercey and Winton used some investor money to make payments to other investors in a Ponzi scheme, Scott claimed. They paid back about $8.8 million to investors but used other investor money for various business and personal expenses, including two residential properties and a houseboat, according to the U.S. attorney. “Few, if any, liquid assets remain to repay investors,” he said.
According to court documents, Piercey also tampered with multiple witnesses by discouraging them from responding to grand jury subpoenas related to the investigation.
If convicted, Piercey faces: a maximum statutory penalty of 20 years in prison and a fine of up to $250,000 or twice the gross gain or loss, whichever is larger, for each wire fraud and mail fraud count; 20 years in prison and a fine of up to $250,000 for each witness tampering count; and 20 years in prison and a fine of up to $500,000 or twice the value of the property involved, whichever is greater, for each money laundering count, Scott said.
Family Wealth Legacy did not immediately respond to a request for comment about the claims.
— Related on ThinkAdvisor: