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.