Close Close
ThinkAdvisor

Regulation and Compliance > Litigation

Barred Broker Sentenced to Prison for $12M Ponzi Scheme

X
Your article was successfully shared with the contacts you provided.

What You Need to Know

  • Matthew Eckstein was sentenced Monday to 3.5-10.5 years in prison.
  • The scheme by the ex-broker and an accomplice targeted almost 50 victims, many of whom were retirees.
  • The former broker pleaded guilty on Feb. 8, over 2 years after he first pleaded guilty but then withdrew his initial plea.

A barred broker was sentenced on Monday to 3.5-10.5 years in prison for his role in a $12 million Ponzi scheme that targeted almost 50 victims, many of whom were retirees, between 2015 and 2017, according to Nassau County District Attorney Anne T. Donnelly.

Matthew Eckstein, 52, of Syosset, New York, pleaded guilty on Feb. 8 before Judge Teresa Corrigan to charges of grand larceny in the first degree (a B felony) and conspiracy in the fourth degree (an E felony) in Nassau County Court, Donnelly said in a statement.

Eckstein previously pleaded guilty to the charges on Sept. 26, 2019, but later withdrew his plea. A new indictment was secured in August 2020 but court closures due to the COVID-19 pandemic further delayed the case, Donnelly noted.

Eckstein and an accomplice told investors they would invest their money but they instead used the money to fund other business enterprises, including hamburger restaurants, personal purchases and to pay other victims of the scheme, in Ponzi style.

Some of the stolen funds were used by Eckstein for the down payment on his home, which had a swimming pool and tennis court, according to Donnelly.

The Financial Industry Regulatory Authority, which barred Eckstein from the industry in 2018, according to his report on FINRA’s BrokerCheck website, as well as the Securities and Exchange Commission, Federal Bureau of Investigation, State Comptroller’s Office, U.S. Postal Inspection Service and New York State Attorney General’s Office all assisted in the case, the DA said.

Starting in January 2015, a victim for whom Eckstein worked as a financial advisor and personal accountant, agreed to invest about $385,000 into Conmac Funding Corp., a Hicksville, New York-based company owned by co-defendant Kevin Brody, at Eckstein’s urging, according to Donnelly.

At the time, Eckstein, assured his client that the investment was safe, had no risk, and the principal would be returned after a two-year waiting period with an additional 4% in interest, just like a certificate of deposit.

However, after waiting two years, the victim requested the return of the money in January 2017 but received a payment of only $26,699. At that time, Eckstein claimed that Conmac was an insurance company, and the victim’s money had to be paid back in installments.

The victim continued to ask for the return of the remaining principal and interest but Eckstein stopped communicating with her, according to Donnelly.

An investigation by the DA’s office started in November 2017 after the victim reported the incident to officials. A search warrant was executed by the DA’s investigators, FBI, U.S. Postal Inspection Service and New York State Comptroller’s Office at Eckstein’s home office in April 2018, and “yielded thousands of pages of financial documents,” Donnelly said.

It was ultimately discovered that Eckstein and Brody defrauded a total of $12 million out of nearly 50 individuals from throughout Long Island; New York City; Westchester; Norwalk, Connecticut; Jupiter, Florida; Redlands, California; North Carolina; South Carolina, New Jersey and Pennsylvania.

Eckstein and Brody provided each of their victims with a username and password for a website to view their account statements and growing account balances, leading victims to mistakenly believe their principal investments were with Conmac Funding and earning interest.

Eckstein and Brody were arrested in September 2018. Brody, of Pennsylvania, was previously sentenced on Sept. 12, 2019, to 2 1/3 to 7 years in prison after pleading guilty to grand larceny in the second degree (a C felony) and conspiracy in the fourth degree, Donnelly said.

Many of the victims were lured into the scheme by Eckstein, who owned the brokerage firm Sisk Investment Services that he ran out of his Syosset home, according to the DA. FINRA expelled that firm in 2018. Eckstein persuaded his existing clients to invest in Conmac Funding.

The DA’s Civil Forfeiture Bureau was able to freeze all of the defendants’ known assets while their cases were pending, including bank accounts and real estate properties, allowing the office to distribute over $5.6 million in restitution to the victims following the prosecutions, Donnelly said.

“This defendant preyed upon seniors and hard-working men and women, duping them out of their retirement savings and other finances, and using the money to fund business ventures and pay for his own personal expenses,” Donnelly said in a news release announcing the sentencing.

(Image: Shutterstock)