A Long Island, N.Y., advisor agreed to pay $6.5 million in restitution to investors he swindled in a settlement agreement with the Securities and Exchange Commission, the SEC announced.

In a parallel criminal action taken in January 2020, the advisor, Steven Pagartanis of East Setauket, N.Y., was sentenced to 14 years and two months in prison after pleading guilty to conspiracy to commit mail and wire fraud. He is currently in federal prison in Danbury, Conn.

According to the SEC complaint, Pagartanis defrauded retail investors by selling investments using false and misleading statements and misappropriating the proceeds to pay personal expenses and make payments to his investors in a Ponzi scheme.

Pagartanis, who was affiliated with a registered broker-dealer for most of the time between September 2012 and March 2018, told some investors, including retirees who had been Pagartanis's customers for many years, that he would invest their funds in either a publicly traded or private land development company, the SEC complaint said.

He promised that the funds would be safe and also promised guaranteed monthly interest payments on the investments. At Pagartanis's direction, his investors wrote checks payable to a company that was secretly controlled by Pagartanis, the complaint said.

“In all, the customers invested approximately $8 million, which Pagartanis used to pay personal expenses and make the guaranteed ‘interest’ payments to his customers. To conceal the scam, which unraveled when Pagartanis stopped making the so-called interest payments to customers, Pagartanis created fictitious account statements reflecting ownership interests in the land development companies,” the SEC said.

The criminal complaint filed by the Suffolk County (N.Y.) District Attorney’s Office alleged the scheme dated back to January 2000 and that he convinced 17 people to invest $30 million with him.

The SEC in February barred Pagartanis from associating with any financial professional and from offering penny stocks.