A former New York broker has been sentenced to 17 and a half years in prison for running a nationwide Ponzi scheme that spanned 10 years and bilked at least 1,000 investors out of more than $115 million, according to a news release from the U.S. Attorney’s Office for the Western District of New York.
Perry Santillo, 41, of Rochester, N.Y., who was convicted of mail fraud, conspiracy to commit mail fraud and conspiracy to launder money, was also ordered by U.S. District Judge Frank P. Geraci Jr. to pay restitution totaling $102,952,582.77.
Santillo, according to the court document, conspired with Christopher Parris and others to participate in the Ponzi scheme. In 2007, Santillo and Parris, 41, formerly of Rochester, and currently of Lawrenceville, Ga., formed a business known as Lucian Development in Rochester, which raised millions of dollars from investors in that city and across the U.S.
The court said they solicited investments for City Capital Corporation, a business operated by Atlanta resident Ephren Taylor. City Capital was a business that purported to help small business and issues promissory notes. It also sold machines with casino-type games on them, according to a U.S. District Court filing in Georgia.
In July 2007, Taylor told Santillo and Parris that their investors’ money in City Capital had been lost. (Taylor was later prosecuted and convicted of operating a Ponzi scheme that defrauded more than 400 victims who invested more than $16 million. In March 2015, he was sentenced to 19 years in prison.)
The Department of Justice said that Parris and Santillo did not tell investors about the lost investment in City Capital. Instead, in August of that year, Santillo and Parris agreed to acquire the debts and assets of the company.
“The acquisition proved financially ruinous, with the amount of the acquired debt far exceeding the value of the acquired assets,” said the U.S. Attorney’s Office in Rochester.
Santillo and Parris, the court document said, did not inform investors that their money was gone and attempted to solicit “ever-increasing amounts of money” from fresh investors but were unsuccessful in recouping the losses. They then bought books of business from at least 15 investment professionals around the country and solicited investors from those books with the aid of individuals who were fanned out in several states. Those individuals had long-established ties to, and trust within, the communities where they targeted investors, the court said.
Investors were told their money would be used to operate businesses in fields such as financial services, insurance, real estate development and medical laboratories, the court said. To keep the Ponzi scheme from being detected, “a substantial portion of incoming new investor monies were depleted by making promised interest and other payments to earlier investors.”
Santillo and Parris used most of the rest of the incoming investor money to finance lavish lifestyles, which involved payments for housing in multiple states, car leases, expenses at a country club and a Las Vegas resort and casino, as well as operating and personal expenses.