Farnbacher Loles team owner charged with $10M fraud
#1
01-22-2011, 12:10 PM
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Farnbacher Loles team owner charged with $10M fraud
One year ago, we reported that Gregory Loles, team principal behind the well-regarded Farnbacher Loles racing outfit and Porsche performance shop, had gotten himself embroiled in an alleged fraud scheme. We hadn't heard much about the scandal since last December, but now the United States Attorney for Connecticut has announced that a federal grand jury has returned a 32-count indictment against Loles. Among the indictments, Loles is being charged with securities fraud, wire fraud, mail fraud and money laundering – to the tune of over $10 million dollars.
According to the official Department of Justice press release, Loles, 51, also owned an investment adviser and brokerage firm called Apeiron Capital Management, Inc., an operation he ran as an unregistered investment adviser after his SEC listing was canceled in 1998. Loles evidently misrepresented his dealings and used monies from his investors (including a Connecticut church's endowment and building funds) to pay personal bills and other unrelated expenses. While he was said to be diverting these funds, he provided false financial statements to his clients, and he made periodic payments to some of them using other investors' money.
The case is being investigated in conjunction with the FBI and SEC, and if convicted, Loles could be going away for a very long time. The mail fraud, wire fraud and four of the money laundering charges alone carry a maximum sentence of 20 years, and other charges carry terms of up to 10 years.
The United States Attorney for the District of Connecticut today announced that a federal grand jury sitting in Hartford has returned a 32-count indictment charging GREGORY P. LOLES, 51, of Easton, with securities fraud, wire fraud, mail fraud and money laundering offenses stemming from an alleged fraud scheme that defrauded several investors, including a Connecticut church, of millions of dollars.
The indictment was returned yesterday, November 30. LOLES has been detained since his arrest by the Federal Bureau of Investigation on December 15, 2009.
The indictment alleges that LOLES owned Apeiron Capital Management, Inc., which was an investment adviser and broker dealer registered with the U.S. Securities and Exchange Commission from 1995 through 1998, at which point the registrations were cancelled. However, LOLES continued to operate Apeiron as an unregistered investment adviser and falsely represented Apeiron to be a registered investment management firm. LOLES also was the majority owner and managing member of Farnbacher Loles Motor Sports, Farnbacher Loles Racing, Farnbacher Loles Street Performance, and various other Farnbacher Loles businesses, which were based in Danbury. Farnbacher Loles was engaged in the business of professional race team operations and servicing high-performance automobiles.
The indictment alleges that LOLES falsely represented to numerous victim-investors, including friends and fellow parishioners of a Church in Orange, Connecticut, that he would act as their investment adviser and invest their funds through Apeiron in various securities including in what he described as "Arbitrage Bonds," which LOLES represented would provide investors with a safe and steady return. LOLES also was selected to serve on the board of the Church's Endowment Fund and was entrusted to manage the Church's investment funds, including the Endowment Fund and the Building Fund, by investing in, among other things, Arbitrage Bonds. However, the Arbitrage Bonds did not exist.
It is alleged that LOLES caused numerous victim-investors to invest more than $10 million with him and Apeiron. LOLES failed to invest the money as represented, and instead diverted investors' funds for his own personal use and benefit, including to pay personal expenses such as credit card bills, and to distribute a large amount of the funds to Farnbacher Loles.
It is alleged that some of the individual investors provided LOLES with funds that had previously been invested in IRAs, 401(k)s, or were proceeds of life insurance payments.
As part of the alleged scheme to defraud, LOLES provided investors with fraudulent account statements and also made periodic "lulling" payments to certain investors using a portion of other victim-investors' funds.
The indictment also alleges that LOLES defrauded clients of Farnbacher Loles.
The indictment charges LOLES with seven counts of mail fraud, 10 counts of wire fraud, nine counts of securities fraud, and six counts of money laundering. The mail fraud, wire fraud and four of the money laundering charges carry a maximum term of imprisonment of 20 years. Two of the money laundering charges carry a maximum term of imprisonment of 10 years, and the securities fraud charges carry a maximum term of imprisonment of five years.
The U.S. Attorney stressed that an indictment is only a charge and is not evidence of guilt. Each defendant is entitled to a fair trial at which it is the government's burden to prove guilt beyond a reasonable doubt.
This case is being investigated by the Federal Bureau of Investigation, with the assistance of the U.S. Securities and Exchange Commission. The case is being prosecuted by Assistant United States Attorney Michael S. McGarry.
This prosecution falls under the umbrella of the President's Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The Task Force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
According to the official Department of Justice press release, Loles, 51, also owned an investment adviser and brokerage firm called Apeiron Capital Management, Inc., an operation he ran as an unregistered investment adviser after his SEC listing was canceled in 1998. Loles evidently misrepresented his dealings and used monies from his investors (including a Connecticut church's endowment and building funds) to pay personal bills and other unrelated expenses. While he was said to be diverting these funds, he provided false financial statements to his clients, and he made periodic payments to some of them using other investors' money.
The case is being investigated in conjunction with the FBI and SEC, and if convicted, Loles could be going away for a very long time. The mail fraud, wire fraud and four of the money laundering charges alone carry a maximum sentence of 20 years, and other charges carry terms of up to 10 years.
The United States Attorney for the District of Connecticut today announced that a federal grand jury sitting in Hartford has returned a 32-count indictment charging GREGORY P. LOLES, 51, of Easton, with securities fraud, wire fraud, mail fraud and money laundering offenses stemming from an alleged fraud scheme that defrauded several investors, including a Connecticut church, of millions of dollars.
The indictment was returned yesterday, November 30. LOLES has been detained since his arrest by the Federal Bureau of Investigation on December 15, 2009.
The indictment alleges that LOLES owned Apeiron Capital Management, Inc., which was an investment adviser and broker dealer registered with the U.S. Securities and Exchange Commission from 1995 through 1998, at which point the registrations were cancelled. However, LOLES continued to operate Apeiron as an unregistered investment adviser and falsely represented Apeiron to be a registered investment management firm. LOLES also was the majority owner and managing member of Farnbacher Loles Motor Sports, Farnbacher Loles Racing, Farnbacher Loles Street Performance, and various other Farnbacher Loles businesses, which were based in Danbury. Farnbacher Loles was engaged in the business of professional race team operations and servicing high-performance automobiles.
The indictment alleges that LOLES falsely represented to numerous victim-investors, including friends and fellow parishioners of a Church in Orange, Connecticut, that he would act as their investment adviser and invest their funds through Apeiron in various securities including in what he described as "Arbitrage Bonds," which LOLES represented would provide investors with a safe and steady return. LOLES also was selected to serve on the board of the Church's Endowment Fund and was entrusted to manage the Church's investment funds, including the Endowment Fund and the Building Fund, by investing in, among other things, Arbitrage Bonds. However, the Arbitrage Bonds did not exist.
It is alleged that LOLES caused numerous victim-investors to invest more than $10 million with him and Apeiron. LOLES failed to invest the money as represented, and instead diverted investors' funds for his own personal use and benefit, including to pay personal expenses such as credit card bills, and to distribute a large amount of the funds to Farnbacher Loles.
It is alleged that some of the individual investors provided LOLES with funds that had previously been invested in IRAs, 401(k)s, or were proceeds of life insurance payments.
As part of the alleged scheme to defraud, LOLES provided investors with fraudulent account statements and also made periodic "lulling" payments to certain investors using a portion of other victim-investors' funds.
The indictment also alleges that LOLES defrauded clients of Farnbacher Loles.
The indictment charges LOLES with seven counts of mail fraud, 10 counts of wire fraud, nine counts of securities fraud, and six counts of money laundering. The mail fraud, wire fraud and four of the money laundering charges carry a maximum term of imprisonment of 20 years. Two of the money laundering charges carry a maximum term of imprisonment of 10 years, and the securities fraud charges carry a maximum term of imprisonment of five years.
The U.S. Attorney stressed that an indictment is only a charge and is not evidence of guilt. Each defendant is entitled to a fair trial at which it is the government's burden to prove guilt beyond a reasonable doubt.
This case is being investigated by the Federal Bureau of Investigation, with the assistance of the U.S. Securities and Exchange Commission. The case is being prosecuted by Assistant United States Attorney Michael S. McGarry.
This prosecution falls under the umbrella of the President's Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The Task Force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
Last edited by lardog; 01-22-2011 at 12:12 PM.
#2
01-22-2011, 06:49 PM
If convicted I hope he goes away for the rest of his life. I really get tired of seeing these types of cases where someone destroys many peoples lives financially and then gets a slap on the wrist...
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