Ponzi Scheme

Phoenix Diversified Commodities Trader Sentenced for Tax, Mortgage, and Fraud Charges in $37 Million “Ponzi” Scheme


March 22, 2010 - Jeffrey H. Sloman, United States Attorney for the Southern District of Florida; John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office; Daniel W. Auer, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division; and J. Thomas Cardwell, Commissioner, State of Florida’s Office of Financial Regulation, announced that defendant Michael A. Meisner, 52, of Boca Raton, FL, was sentenced today to 188 months in prison, to be followed by five years of supervised release. A hearing is scheduled for May 28, 2010 at 2:00 p.m. to determine the amount of restitution Meisner owes to the victims of the fraud.

Meisner pled guilty on September 2, 2009, to a three-count Information charging him with mail fraud, in violation of 18 U.S.C.§ 1341, loan application fraud, in violation of 18 U.S.C. § 1014, and tax evasion, in violation of 26 U.S.C. § 7201.

As set forth in the Information and the written proffer filed with his plea agreement, in approximately October, 2001, Meisner, a registered commodity trading advisor, incorporated a company called Phoenix Diversified Investment Corporation (PDIC). Through PDIC, Meisner solicited and accepted more than $37 million from 260 investors through until approximately May, 2008, when PDIC was placed into receivership and bankruptcy.

To solicit investors, Meisner made materially false statements about his background and about PDIC’s performance, and omitted material facts. He lied to prospective investors, telling them that he was a highly successful commodities trader who had developed a commodities index software trading program that consistently resulted in profitable commodity futures trades. He provided falsified historical performance return sheets that showed high monthly returns on trades, and told prospective investors that their investments were safe and secure, and that their principal investment was guaranteed and not at risk.

Meisner failed to tell prospective investors that only approximately $13 million of the approximate $37 million in PDIC investor funds were deposited into commodities trading accounts. Though he represented profit to the investors, in reality, trades on these funds showed a net trading loss of more than $6 million. Meisner also failed to tell potential investors that approximately $22 million of PDIC investor monies were not invested but, instead, were used to make fraudulent ponzi-type “interest payments” to prior investors.

In addition, Meisner failed tell potential investors that approximately $6.8 million in PDIC investor monies were used to support his and his family’s luxurious lifestyle. PDIC investor monies were used to pay for, among other things: the purchase or lease of at least 15 luxury cars, including a $217,800 2005 Bentley GT and a $152,000 2005 Aston Martin; the purchase or lease of eight luxury Palm Beach county residences, including high-end single-family homes in gated communities and oceanfront condominiums; luxury vacations, private education expenses, country club fees, multiple large-screen televisions and other high-end electronics, luxury clothing and housewares, and a lavish wedding for his daughter held at Mar-A-Lago on Palm Beach.

Meisner also admitted that on or about April 20, 2006, he filed a false application to obtain a $1,000,000 mortgage loan on certain property located on NW 49th Lane, Boca Raton, Florida. He further admitted that from on or about October 21, 2006, up to and including the present, he evaded the payment of a large part of the $444,581 in federal income tax he reported he owed for 2005 by, among other things, using corporate PDIC business funds to pay for personal living expenses related to his lavish lifestyle.

On March 5, 2010, Meisner’s wife, Victoria R. Meisner, of Boca Raton, FL, was sentenced to 18 months’ imprisonment for filing a false tax return, in violation of 26 U.S.C. § 7206(1). She was also sentenced to one year of supervised release, and was ordered to pay restitution in the amount of $345,399.00 to the Internal Revenue Service.

Mr. Sloman commended the investigative efforts of the Federal Bureau of Investigation, the Internal Revenue Service, Criminal Investigation Division and the State of Florida’s Office of Financial Regulation. The case is being handled by Assistant U.S. Attorney Carolyn Bell.