A Louisiana businessman was charged Friday with engaging in a Ponzi scheme to defraud about 160 investors _ mostly elderly people _ out of roughly $19.5 million and using some of the money to pay for cars, cruises, sports tickets and a house.
A federal grand jury indicted Matthew B. Pizzolato, 26, of Tickfaw, on charges that include securities fraud, money laundering and obstruction of justice. FBI agents arrested Pizzolato in Hammond about an hour after the grand jury handed up its 64-count indictment.
Pizzolato had offices in Baton Rouge, Covington, Hammond and Lake Charles from 2005-2008 and advertised investment services under several company names, including Gulf Region Guaranty Inc., the indictment said.
Pizzolato allegedly promised rates of return that were higher than market rates for certificates of deposit or treasury bills. He also promised investors their money was protected against losses, but he used it in high-risk futures trading and other risky ventures that investors didn't authorize, according to the indictment.
A lawyer for Pizzolato didn't immediately return a call for comment Friday.
Pizzolato spent most of the money he raised from investors, including about $600,000 for the construction of a home in Ponchatoula, authorities said.
On Thursday, another Ponchatoula resident was charged in a separate case with defrauding at least 200 investors of $11 million in what state authorities described as a Ponzi scheme. William J. Chaucer Jr., 60, of Ponchatoula, was booked into a Tangipahoa Parish jail on state charges that included felony theft and selling unregistered securities.
U.S. Attorney Jim Letten said the cases against Pizzolato and Chaucer aren't related.
"Ponzi schemes have been around for a long time," Letten said. "We see a cluster of them right now."
Letten said it's unclear if Pizzolato's alleged victims will be able to recoup any of their losses.
"Most of it was depleted," he said of the investors' money, "but the victims do receive priority treatment."
In early 2008, state regulators ordered Pizzolato to stop selling securities after some of his investors' called the Louisiana Office of Financial Institutions to ask about his companies, said Rhonda Reeves, the state's deputy commissioner of securities.
"They just sounded a little bit out of the ordinary," Reeves said of Pizzolato's investment pitches. "And the more questions we asked, the more things didn't sound right."
Pizzolato was charged with witness tampering because he allegedly offered his former employees a $20,000 bribe to destroy incriminating records. He also allegedly stole records from an investor's home and altered them in an attempt to conceal the alleged scheme.
In a Ponzi scheme, investors are promised strong returns from what turn out to be fake sources, and money raised from later investors is sometimes used to pay earlier investors.
The purchases that Pizzolato made with investors' money included $93,410 for a 2006 BMW, $17,600 for Carnival cruises, $35,242 for a diamond engagement ring and $8,600 for New Orleans Saints tickets.
He is expected to make his initial court appearance Monday.