Illinois Man Nailed in $105 Million Ponzi

CHICAGO (CN) - A fund manager defrauded 400 investors in a $105 million Ponzi scheme, federal prosecutors say. Daniel Spitzer used his four companies, including Kenzie Financial Management, and 12 LLCs, many of them "Three Oaks" funds, to take "a significant portion of investors' funds," according to the 8-count grand jury indictment.

Spitzer, of Barrington, Ill., and St. Thomas in the U.S. Virgin Islands, also controlled, Kenzie Services of Nevis, West Indies; Draseena Funds Group, of Illinois; DN Management Co. LLC, of Nevada; and Nerium Management, of Illinois.

Spitzer's "investment funds" bore names such as Arrow Fund, Nerium Currency Fund, Conservium Fund, Senior Strength Q Fund, Three Oaks Fund, Three Oaks Senior Strength Fund, and three other Oaks Funds.

From 2004 to 2010 Spitzer promised, falsely, that his suckers' "funds would be used to invest primarily in foreign currency trading, that the Kenzie Funds had never lost money, and that the Kenzie Funds had achieved profitable historical returns," the indictment states.

Instead, Spitzer took a "significant portion" of the money for himself and used $71 to make Ponzi payments, according to the indictment.

Spitzer conned investors by telling them that "the different Kenzie Funds had different levels of risk and different investment strategies," though he actually commingled the money and invested less than one-third of it, the indictment states. Spitzer promised returns of from 4.52 percent to 13.54 percent, according to the indictment.

He sent out bogus account statements, telling his suckers in 2009 that the funds were worth $250 million, though his bank accounts held only about $4 million at the time, the indictment states.

If convicted of eight counts of mail fraud, Spitzer, 51, faces up to 20 years in prison on each count, and a $250,000 fine per count, with mandatory restitution.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit