CHICAGO (CN) – A Chicago-area businessman is accused of running a $77 million Ponzi scheme for more than 20 years. Frank Castaldi, 56, paid off old investors with new money in a promissory note scheme that began in 1986, federal prosecutors say in a criminal information.
Castaldi “guaranteed” 10 to 15 percent returns on 6-month, renewable promissory notes, and used money from new investors “to make purported ‘interest’ payments to earlier investors,” prosecutors said, adding that he had more than 300 victims
Castaldi promised investors their money would be put into “certificate of deposit-like instruments,” insured for up to $250,000, and claimed that the “guaranteed” returns were due to a “special relationship” he had with financial institutions, according to the criminal information.
Castaldi took in more than $77 million and caused 300 investors to lose more than $31.5 million, prosecutors say.
Castaldi allegedly told his victims, falsely, that that they did not have to pay federal taxes on their profits.
Castaldi has his hand in a number of Chicagoland businesses. According to the criminal information, he was on owner and officer in Blackhawk Commons, in Franklin Park; Cumberland Accounting Services; C-Z Travel; First State Travel Service; Parkway Towers Insurance Agency; and Re/Max Cumberland Realty, all of Norridge; and Vitangelo’s Pizza & Restaurant, a pizzeria in Chicago.
Castaldi was charged with one count of mail fraud in January. The new charges filed this week include two counts of mail fraud, and one count of “corruptly endeavoring to impede” the IRS. The U.S. seeks forfeiture of over $31 million.
If convicted, Castaldi faces up to 20 years in prison and a $250,000 fine for each mail fraud count, and 3 years in prison and a $250,000 fine for the tax charges.