NEW: Investment Banker Pleads Guilty to Running Ponzi Scheme
Monday, February 27, 2012
Martin B. Feibish, 81, of Providence, an independent insurance agent, investment broker, and creator of two investment companies, has signed an agreement filed with the U.S. District Court in Providence to plead guilty to federal charges of defrauding an investor by perpetrating a self-contained “Ponzi Scheme” on one victim, and for filing a false tax return, announced United States Attorney Peter F. Neronha.
According to an information and plea agreement filed with the court, it is alleged that between 2001 and February 2011, Feibish induced a person to invest in excess of $5 million by creating false and fictitious investment schemes. Court documents allege that Feibish returned only a portion of the funds to the investor, and that he falsely and fraudulently represented that the funds were returns on the investor’s investments. It is alleged that the funds provided to the investor were actually the result of a “Ponzi Scheme” perpetrated by Feibish with the investor’s own money.
Fund fuels gambling activities
It is alleged in court documents that Feibish induced the victim to invest monies with his companies so that he could control the funds and use them for his own benefit, including to fund his gambling activities.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTIt is also alleged in court documents that for tax year 2009, Feibish filed a false tax return claiming income in the negative amount of $94,699. It is alleged that Feibish had received income substantially in addition to the amount reported.
Feibish is charged with one count each of mail fraud and filing a false tax return. He is scheduled to be arraigned on March 19, 2012, before U.S. District Court Magistrate Judge David L. Martin.
Mail fraud is punishable by a maximum sentence of 20 years in federal prison; three years supervised release; and a fine of $250,000. Filing a false tax return is punishable by up to three years in federal prison; three years supervised release; and a fine of $1,000,000.
An information is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The case is being prosecuted by Assistant U.S. Attorney Luis M. Matos. The matter was investigated by agents from the Federal Bureau of Investigation and Internal Revenue Service, Criminal Investigation.
