A former Connecticut financial advisor who now lives in Florida was arrested and charged last week in connection with an alleged Ponzi scheme that defrauded clients out of more than $4 million, according to the U.S. Attorney's Office for the District of Connecticut.

John A. Masanotti Jr., 69, of Bonita Springs, Fla., was arrested Thursday, two days after a federal grand jury in New Haven, Conn., returned a 21-count indictment charging him with investment fraud. He appeared in federal court in Fort Myers, Fla., was released on a $100,000 bond and is scheduled to be arraigned in U.S. District Court in Hartford, Conn., on Wednesday, the release said.

Prosecutors said that between about 2016 and 2023, Masanotti, the former owner and managing member of Middlesex Mortgage Group LLC, also known as Middlesex Group, in Darien, Conn., defrauded at least 10 clients of a total of more than $4 million by using their money for personal expenses, and to pay returns to other clients.

Masanotti tricked investors into giving him money with the promise that it would be invested in a purported pooled investment vehicle advised by Middlesex that was known as the Middlesex Fund or the MMG Fund, according to a parallel civil complaint filed by the SEC. The complaint said many of the investors liquidated securities in retirement accounts to invest in the fund.

Investors were told that the fund would trade in foreign currencies and securities, as well as buy stock through initial public offerings, the complaint said. “Masanotti touted his successful trading to investors, explaining that he used a lucrative and proprietary method for algorithmic trading in currency futures, and telling at least one investor that this trading strategy resulted in rates of return between 10% and 20% annually,” the complaint said.

But law enforcement officials said it was all lies. The SEC complaint said Masanotti used investors' money for Ponzi-like payments to investors and to support a lavish lifestyle, including paying mortgages on his wife Mary Ferrara's  properties in Darien and Bonita Springs, Fla., and paying for luxury vehicles and a country club membership.

He covered up the scheme by providing clients with bogus monthly account statements from Middlesex that reflected “the purported shares each owned in the Fund and the purported investment returns,” the complaint said.

The SEC said as of the filing of its complaint, the bank and brokerage accounts of Masanotti and his wife were almost depleted, despite the sale she made of the Darien property in October 2023 for $1.85 million. Investors have still not been repaid, the complaint said.

Prosecutors also accused Manasotti of lying to the FBI during the investigation and falsifying records to obstruct the investigation.

Masanotti could not be reached for comment.

The indictment charges Masanotti with eight counts of wire fraud, an offense that carries a maximum term of imprisonment of 20 years on each count; 11 counts of making illegal monetary transactions, an offense that carries a maximum term of imprisonment of 10 years on each count; one count of making false statements, an offense that carries a maximum term of imprisonment of five years; and one count of falsification of records in a federal investigation, an offense that carries a maximum term of imprisonment of 20 years.