Folsom man pleads guilty in $45 million Ponzi fraud

Published: Saturday, Feb. 2, 2013 - 12:00 am | Page 6B
Last Modified: Tuesday, May. 28, 2013 - 10:12 am

Pleading guilty in one of Sacramento's biggest fraud cases in years, a Folsom man admitted Friday he ran a Ponzi scheme that cost investors nearly $45 million.

Anthony Vassallo, 33, pleaded guilty to a single fraud charge in connection with his defunct investment firm, Equity Investment Management and Trading Inc. The firm was shuttered by authorities shortly before Vassallo's arrest in March 2009.

Although Vassallo faces a maximum 20 years in prison, prosecutors agreed to recommend a 16-year sentence, according to court papers. Sentencing is set for May 3 in U.S. District Court in Sacramento.

The Vassallo case was one of the biggest Ponzi schemes in recent Sacramento-area history. It spawned a bizarre subplot involving a misguided good Samaritan effort to retrieve money for victims.

Court records show Vassallo's firm promised investors profits of up to 36 percent a year through a computerized stock-trading system.

The computers in his office had "dummy screens to convince investors of the existence and validity of his profit-generating, predictive software," according to a prosecutor's account included in his plea agreement.

In fact, Vassallo was losing a fortune and used new investor dollars to pay off previous investors.

More than 300 customers invested a total of $83.3 million with Vassallo, the U.S. attorney's office said. Losses totaled $44.9 million. Authorities said the scam was an example of so-called "affinity fraud" because many of Vassallo's victims were, like him, Mormons.

A co-defendant from Pleasanton, 66-year-old Kenneth Kenitzer, pleaded guilty earlier and is awaiting sentencing.

Separately, four other people were sentenced to probation after being charged in a botched attempt to recover funds on behalf of one of Vassallo's victims.

The four – three men and a woman – were accused of impersonating federal agents in an effort to strong-arm three men linked to Vassallo.

Outfitted with bulletproof vests and security badges, the foursome confronted the three men at a Folsom office park and demanded they return $378,000.16 to an investor.

No money was returned, and the four were later arrested.

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Read more articles by Dale Kasler

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