Ponzi Scheme

Bloomfield Hills Resident Goes to Jail on Multi-Million Dollar Lender-“Ponzi” Scheme


March 23, 2010 - DETROIT, MI—Raymond Frank Joseph, 55, of Bloomfield Hills, was sentenced today to 66 months in prison, followed by three years of supervised release, after having have been convicted in December 2009, of three counts of wire fraud, nine counts of interstate transportation of stolen money or property, and twenty-four counts of conducting monetary transactions in criminally derived property, announced Barbara L. McQuade, United States Attorney for the Eastern District of Michigan. Joseph was also ordered by pay restitution in the amount of $2.2 million to victims of his Ponzi scheme.

Ms. McQuade was joined in the announcement by Special Agent in Charge Maurice Aouate, Internal Revenue Service Criminal Investigation Division and Special Agent in Charge Andrew Arena, Federal Bureau of Investigation.

A federal jury found Raymond Frank Joseph guilty of all 36 counts following a two-week jury trial in Detroit before United States District Court Chief Judge Gerald E. Rosen. After the verdict, the Court revoked bond and remanded the defendant to custody pending today’s sentencing.

According to court records, from 2002 through 2007, Joseph solicited loans of money from several individuals to invest in a number of business ventures. To induce the lenders to give him their money, Joseph fraudulently promised the victims a specific date of repayment with interest resulting from his claimed business investment of the money. When Joseph received the lenders’ money, he did not invest it as he had earlier represented but instead used the loaned money: (1) to repay, in a manner characteristic of a “Ponzi” scheme, other individuals who had earlier loaned Joseph money; and (2) to fund Joseph’s own personal expenses, including his credit card bills, household expenditures, and vehicle costs. As a result of his fraudulent acts, Joseph obtained approximately $2.7 million dollars which he failed to repay his lenders.

Special Agent Aouate stated, “"Although the economics of ponzi schemes are simple, today's swindlers artfully conceal their greed with sophisticated marketing and numerous misrepresentations. Beware, for if is sounds too good to be true, it probably is."

Special Agent Arena stated, "Investors generally understand that there's a correlation between risk and reward, and Ponzi scheme cases like this one reinforce the fact that investing money is inherently risky. Before handing hard-earned money to investors, individuals should know who they are dealing with and how their money will be invested. In light of recent large scale Ponzi schemes, public awareness is at the forefront. The FBI and its partners will aggressively investigate people who swindle money from others, whether it involves hundreds of thousands or millions of dollars."

United States Attorney McQuade thanked the IRS Criminal Investigation Division and the FBI for their investigation of the case. The case was prosecuted by Assistant United States Attorney Paul Burakoff.