A Vermilion, Ohio, financial planner was sentenced to 17.5 years in prison and ordered to pay more than $4.4 million in restitution for financial crimes that victimized nearly 100 clients, including churches and charities, the U.S. Attorney for the Northern District of Ohio announced last week.
Richard A. Zakarian, 48, pleaded guilty earlier this year to two counts each of wire fraud and mail fraud and one count of making and subscribing false income tax returns. He was sentenced in federal district court in Cleveland.
Zakarian was a certified financial planner and a self-employed tax preparer who owned and operated several business ventures, including a payroll service. He conducted two schemes where he defrauded clients, according to the U.S. Attorney, one in which he defrauded investors and another where he defrauded clients of his payroll business. Many of the payroll tax victims were churches, charities and other non-profit organizations.
“This defendant preyed on non-profits, churches and small businesses that struggled to make ends meet while making their communities better,” says Steven M. Dettelbach, United States Attorney for the Northern District of Ohio. “He never meant to help them, only to defraud them. This was a systemic, deliberate pattern of behavior that took place over years.”
According to the U.S. Attorney, from 2002 to 2012, Zakarian convinced clients to invest with him. He primarily targeted clients from a tax-preparation business he ran when they received their tax refunds and he knew they had money. Zakarian misled clients to believe their funds would be placed in safe, guaranteed-return investments. Instead, he diverted the funds to pay personal and business expenses, and invested in risky investments for which he had a consistent history of incurring large losses, Dettelbach says.
While some received a return on part or all of their investment, 23 clients incurred combined out-of-pocket losses of more than $1 million. In addition, the clients did not receive hundreds of thousands of dollars of gains on their investments that Zakarian falsely reported to them, the U.S. Attorney says.
He also prepared tax returns but did not submit the taxes to the various government agencies as he said he was doing, the U.S. Attorney says.
Zakarian devised the tax scheme in hopes of raising money to be able to pay victims of his investment fraud scheme. He hoped to generate large, quick profits that he could use to cover his operating expenses, repay his investment clients, pay his clients’ employment taxes and have money left over. Instead, he consistently lost money, Dettelbach says.