Daniel Spitzer, of Barrington, Illinois, was charged last Thursday with
eight counts of mail fraud, according to a
Feb. 11 DOJ press release. Prosecutors allege that Spitzer defrauded over 400 investors through
the operation of a $105 million
Ponzi scheme and investment fraud.
The criminal indictment alleges that Spitzer controlled 12 investments
funds (referred to as “the Kenzie Funds”) through several
corporate entities, which included: Kenzie Financial Management; Kenzie
Services, LLC; Draseena Funds Group, Corp.; DN Management Company, LLC;
and Nerium Management Company. It is further alleged that Spitzer made
false representations to potential investors about the funds, including
that the funds had never lost money and that the 12 different funds had
different levels of risk and different investment strategies.
Allegedly, investors were also told that over the previous five-year period
the funds had returned rates of 4.52 percent to 13.54 percent. (As reported
in the press release, the actual total net rate of return for “the
Kenzie Funds” was approximately 1 percent.) The indictment also
alleges that Spitzer commingled investor monies from the different “Kenzie
funds,” misappropriated the majority of investor monies, and used
investment money from new investors to make Ponzi payments to older investors.
In June of last year, the SEC charged Spitzer with fraud. An emergency
order freezing his assets was obtained. If convicted of the current charges,
Spitzer could face up to 20 years in prison and a $250,000 fine for each
of the eight counts of mail fraud. His arraignment date was not announced
but will be held in U.S. District Court.