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Politics

Steven Pagartanis Indicted in Multi-Million Dollar Ponzi Scheme

July 27, 2018

According to the US Attorney’s Office for the Eastern District of New York, a nine-count indictment was unsealed Wednesday, July 25, in federal court in Central Islip, charging Steven Pagartanis, a formerly licensed financial advisor and affiliate of a registered broker-dealer, with securities fraud, mail and wire fraud conspiracies, as well as money laundering, for orchestrating a Ponzi scheme over the course of more than 18 years.

Pagartanis was arrested and was arraigned before United States Magistrate Judge Arlene R. Lindsay.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and James Robnett, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (IRS-CI), announced the charges.

According to the indictment and other court documents, from January 2000 to March 2018, Pagartanis solicited elderly victims to invest in real estate-related investments, including those affiliated with a publicly traded Canadian company. Pagartanis promised the victims that their principal would be secure and earn a fixed return, which he typically claimed to be between 4.5 to 8 percent annually.

At Pagartanis’s direction, the victims wrote checks payable to an entity that was secretly controlled by Pagartanis. Pagartanis utilized a network of bank accounts to launder the stolen funds, which he then used to pay personal expenses, buy luxury items and make the guaranteed “interest” or “dividend” payments to other victims. Pagartanis created fictitious account statements reflecting ownership interests in the purported investments to induce investment and conceal the scheme. In all, the victims invested over $13 million and sustained actual losses of over $8 million. Many lost substantial portions of their life savings as a result of the scheme.

“As alleged, Pagartanis conned vulnerable members of the community who had entrusted him with their hard-earned savings,” stated United States Attorney Donoghue. “Protecting the elderly and the community at large from predators like the defendant is a priority of this Office and the Department of Justice and with our law enforcement partners we will continue to pursue that mission.” Mr. Donoghue also thanked the United States Securities and Exchange Commission and the Financial Industry Regulatory Authority for their assistance in the investigation.

“The elderly are among the most vulnerable members of society, as they are common targets of fraudulent schemes,” stated FBI Assistant Director-in-Charge Sweeney. “As alleged, Pagartanis preyed on the elderly with his own interests in mind. While causing significant financial loss to his victims, Pagartanis experienced significant financial gain – allegedly paying personal expenses and making extravagant purchases. As we persistently investigate bogus Ponzi schemes, we aim to protect all targeted citizens from the threat of financial loss.”

“The agents of IRS-CI along with our law enforcement partners will vigorously pursue fraudsters who allegedly victimize the elderly,” stated IRS-CI Special Agent-in-Charge Robnett. “We will gladly dedicate our specialized skillset to such investigations to ensure those responsible are brought to justice.”

The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Pagartanis faces a maximum sentence of 20 years’ imprisonment.

The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorney Artie McConnell is in charge of the prosecution.

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