Fake Hedge Fund Managers Charged with Fraud in Alleged $3.5M Foreign Currency Ponzi Scheme
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.