United States Attorney
Eastern District of New York
Wednesday, February 1, 2012
New York Woman Indicted for Operating Ponzi Schemes
Defendant Allegedly Defrauded Investors of More Than $4 Million
BROOKLYN, N.Y. – Laurie Schneider of Oceanside, N.Y., has been indicted for operating Ponzi schemes that defrauded investors of more than $4 million. The defendant was arraigned today before U.S. Magistrate Judge A. Kathleen Tomlinson at the U.S. Courthouse in Central Islip, N.Y.
The charges were announced by Loretta E. Lynch, U.S. Attorney for the Eastern District of New York, and Janice K. Fedarcyk, Assistant Director-in-Charge of the FBI New York Field Office.
As alleged in the indictment, Schneider began accepting money in September 2006 from individuals seeking a return on their investment. In one scheme, operating a shell company incorporated as Janitorial Close-Out City Corp., Schneider falsely informed potential investors that Janitorial Close-Out invested in industrial equipment and machinery manufactured by companies in China. To induce investments, Schneider, among other things, personally guaranteed specified positive rates of return as high as 60 percent; represented that she had a business contact who had strong relationships with companies in China; and represented that she would be able to buy the industrial equipment and machinery at wholesale prices which Janitorial Close-Out would resell in the United States at a 15 to 60 percent profit over a nine to 18-month period. In fact, the indictment charges that Schneider actually was running a Ponzi scheme, paying returns to Janitorial Close-Out investors not from any profits earned on the purchase and resale of industrial equipment and machinery, but rather from existing investors’ deposits or money paid by new investors. Schneider never produced or earned the rates of return that she promised. Rather, the positive rates of return were simply pre-determined rates made up by Schneider based upon fictitious profits.
The government estimates that Schneider defrauded over 25 investors in Janitorial Close-Out of more than $4 million and more than $5 million through related schemes.
“In these difficult economic times, it’s all the more troubling that, as alleged in the indictment, someone would take advantage of the trust of investors for personal financial gain,” said U.S. Attorney Lynch. “As alleged, this defendant falsely represented herself as having international business connections that would benefit her investors, when in reality she was engaged in purely homegrown fraud and deception. This indictment serves as a warning that we will vigorously investigate and prosecute those who, by deceit and false promises, would steal from those who believed they were investing in a legitimate enterprise.” Ms. Lynch added that the government’s investigation is continuing.
FBI Assistant Director-in-Charge Fedarcyk stated, “Ponzi schemes have been around for so long because, unfortunately, they are such an effective means of swindling people out of their hard-earned money. Investors need to be wary of ‘investment opportunities’ that ‘guarantee’ inordinately high rates of return, and should perform due diligence. But it is the perpetrators of these fraudulent schemes, not their victims, who are to blame. The FBI remains committed to protecting the investing public from them.”
If convicted, Schneider faces a maximum sentence of 20 years in prison on each of three counts of wire fraud count.
The government’s case is being prosecuted by Assistant U.S. Attorneys Richard T. Lunger and Lara Treinis Gatz.
This case was brought in coordination with the President’s Financial Fraud Enforcement Task Force, which was established to wage an aggressive and coordinated effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
To report financial fraud crimes and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov .
The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.