U.S. Department of Justice

United States Attorney
Northern District of Ohio

Owner of DJ Harriett, Inc. Pleads Guilty to Ponzi Scheme

Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, today announced David J. Harriett pleaded guilty to one count of mail fraud for executing a Ponzi scheme that defrauded approximately 200 people.

“These types of financial frauds, in which people portray themselves as legitimate investors but simply take their clients’ money, are a serious problem and we will continue to prosecute them vigorously,” Dettelbach said.

Harriett, 60, of Warren, Ohio, faces a recommended guideline sentence of 63 to 78 months in prison, although that final determination will be made by the judge. Prosecutors estimate the loss to investors at approximately $7 million.

From August 1996 through January 2010, Harriett represented to more than 200 investors that he and his company, DJ Harriet, Inc., were approved “project managers” for the construction of new McDonalds and Pioneer Chicken franchise restaurants in the Northeast Ohio, New York, Indiana, Pennsylvania and Florida, according to Harriet’s plea.

Harriett solicited investors for DJ Harriett, Inc. and, in exchange for their investment, provided investors with promissory notes that purportedly guaranteed the return of their investment, plus significant interest, according to his plea.

Harriet sent numerous letters through the mail to investors which falsely represented the success and growth of the company as well as the existence and success of franchise construction contracts. Harriett knew that neither he nor DJ Harriett, Inc. had any contracts with McDonalds or Pioneer Chicken, let alone franchise construction contracts. Moreover, Harriett also knew the investor money was not being put to any legitimate use, but rather was being used to make Ponzi payments to other investors, to operate DJ Harriett, Inc. and for Defendant’s own purposes and personal use, according to his plea.

This case is being prosecuted by Assistant United States Attorney Bridget M. Brennan after an investigation by the Youngstown Office of the Federal Bureau of Investigation.

This prosecution is sponsored by President Barack Obama’s Financial Fraud Enforcement Task Force.

President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive 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.

If convicted, Harriett’s sentence will be determined by the court after review of factors unique to this case, including his prior criminal record, if any, his role in the offense and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

An information is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

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GENERAL INFORMATION
Financial Fraud Enforcement Task Force

 Leadership
Eric Holder, Attorney General, Chair
 
 Contact
(202) 514-2000
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What is Financial Fraud?
What is Financial Fraud?

Financial Fraud encompasses a wide range of illegal behavior - from mortgage scams to Ponzi schemes, credit card theft to tax fraud. Everyone is affected by financial fraud.