This Ponzi Scheme Is Over, SEC Says
ORLANDO (CN) - A Sarasota, Fla., private fund manager defrauded clients in a $4 million Ponzi scheme and "squandered" the money on himself and his girlfriend, the SEC said Wednesday.
The SEC sued Gaeton S. Della Penna and his company Gaeton Capital Advisors, in Federal Court. The U.S. Attorney's Office for the Middle District of Florida is pursuing parallel criminal charges.
The SEC said in a statement that Della Penna promised 5 to 10 percent annual returns, while "all the while" he was "siphoning away investor funds to the tune of about $1.1 million to make mortgage payments on his 10,000-square-foot home and make payments to his girlfriend who lived with him there."
"From 2008 through 2013, defendant Gaeton S. Della Penna defrauded investors in three companies he controlled," the SEC said in its lawsuit. "Della Penna solicited individuals to purchase notes in these companies on the representation the companies would use the money to trade in securities, in which Della Penna claimed to have been engaging in successfully. In fact, Della Penna lost almost all of the money through a combination of unsuccessful investments, use of investor money to pay Della Penna's personal expenses, including mortgage payments and payments to his girlfriend, and, in Ponzi-scheme fashion, use of later investors' money to pay fake 'returns' to prior investors. Della Penna covered up his fraud by sending investors documents falsely showing positive returns at a time when they were losing money. Della Penna also solicited money from other investors on the representation he would use their money to invest in small companies, but he stole most of that money as well. In total, of the approximately $3.8 million Della Penna raised, he pocketed $1.1 million and used $1.4 million to pay prior investors."
Della Penna, 61, founded and is the managing members of three Florida LLCs: A-G Hedge Group, The Contrarian Fund, and The New Economy Fund.
The SEC seeks disgorgement of ill-gotten gains, penalties and an injunction.