Connecticut Man Pleads Guilty to Securities Fraud in $10 Million Investment Scheme
Gregory P. Loles pled guilty in federal court on Tuesday in connection to a multi-million dollar investment scheme that authorities say defrauded a number of Connecticut investors, including a church, out of more than $10 million. Total losses were at least $8.7 million, according to the Department of Justice.
Loles, of Easton, Conn., owned Apeiron Capital Management. The firm was a registered investment adviser and broker dealer from 1995 through 1998. When the firm's registration status was cancelled, Loles acted as if nothing had changed. In fact, according to a Department of Justice News Release, Loles continued to falsely represent Apeiron as a registered investment management firm and to solicit investors on the firm's behalf.
In his plea, Loles admitted to soliciting more than $10 million from numerous investors, many of whom were acquaintances and friends from his church. He told investors he would invest their funds through Apeiron in securities that would provide a "safe" and "steady" return, including in "Arbitrage Bonds," which didn't exist. Lole's church also entrusted its endowment fund and Building fund to Aperion.
As with many other investment schemes, Loles never actually invested any of the investors' funds. Instead, he diverted the funds for personal uses. He also transferred a portion of the funds to a group of companies for which he was the majority owner and managing member, including: Farnbacher Loles Motor Sports, Farnbacher Loles Racing, and Farnbacher Loles Street Performance. To cloak the investment fraud, Loles issued fake account statements to investors and occasionally paid "returns" to investors with other investors' funds.
Loles pled guilty to mail fraud, wire fraud, securities fraud, and money laundering before U.S. District Judge Mark R. Kravitz in New Haven, Conn. Sentencing has been scheduled for Oct. 14, 2011. Loles has been in custody since his arrest on Dec. 15, 2009. He faces a potential combined sentence of 80 years, plus restitution.