George Sepero, of Glen Rock, N.J., and Carmelo Provenzano, of Garfield,
N.J., were arrested on Wednesday on charges related to an alleged $3.5
million investment fraud. In the Complaint, Sepero and Provenzano are
accused of defrauding investors by claiming to run a series of New Jersey
hedge funds that could render extraordinary returns of over 150 percent
through the use of a proprietary computer algorithm.
"The old adage ‘if it sounds too good to be true, it probably
is’ remains constant," said Michael B. Ward, Special Agent
In Charge of the Newark Division of the FBI, in a U.S. Attorney press
release. "In this case, Sepero and Provenzano claimed to own a secret
computer algorithm which would achieve returns of 170 percent or more
at a time when financial markets were in flux. Instead, it was another
of the many
Ponzi schemes that have been uncovered in New Jersey wherein subjects are diverting
money to support lavish lifestyles."
The Complaint alleges that Sepero and Provenzano lured investors with the
promise of sky-high returns, and then issued fake reports and emailed faked "screen shots"
to support their claims that the funds were doing well. According to the
Complaint, the men never invested any of the money in the foreign currency
market, but rather diverted and misappropriated the majority of the funds
for their personal use. They also allegedly used some of the money to
make Ponzi-style payments to investors.
"According to the Complaint, Sepero and Provenzano used fake companies
and phony reports to steal millions in real money from trusting investors,"
said U.S. Attorney Paul J. Fishman. "With other people’s cash
in their pockets, the defendants allegedly went on a spending spree involving
luxury vehicles, international travel and extraordinary bar bills."
Each of the men has been charged with one count of wire fraud conspiracy.
If convicted, Sepero and Provenzano could face up to 20 years in prison.