Criminal Justice News

Friday, April 20, 2012

Scottsdale Man Indicted for Operating $66 Million Ponzi Scheme

PHOENIX—On April 17, 2012, a federal grand jury in Phoenix returned a 102-count indictment against former CPA Daniel Wise, 55, of Scottsdale, Arizona, for mail fraud, wire fraud, and transactional money laundering.

“The U.S. Attorney’s Office will continue to work with our law enforcement partners to investigate and prosecute those who prey on the public for personal financial gain,” said Acting U.S. Attorney Ann Birmingham Scheel. “This scheme serves as an unfortunate reminder that all investors, both novice and experienced, should exercise caution before committing their hard-earned money to investment opportunities that promise high-yield returns with little or no risk.”

FBI Special Agent in Charge James L. Turgal Jr., Phoenix Division, stated, “The indictment of Daniel Wise for mail fraud, wire fraud, and transactional money laundering has been the culmination of investigative efforts by the Internal Revenue Service, the U.S. Postal Inspection Service, the U.S. Department of Labor, and the FBI. The success of investigating these types of complex fraud cases is contingent upon our established relationships with our law enforcement partners. The FBI will continue to work with our law enforcement partners and the U.S. Attorney’s Office in combating various fraud matters.”

“This indictment is the result of a team effort by several federal agencies and the U.S. Attorney’s Office. Sophisticated white-collar financial crimes such as Ponzi schemes are often best investigated by pooling the resources, training, and expertise of numerous agencies,” said Dawn Mertz, Special Agent in Charge of the Phoenix Field Office of Internal Revenue Service, Criminal Investigation.

“Certified Public Accountants are entrusted to properly handle their clients’ financial affairs,” stated Pete Zegarac, Inspector in Charge of the U.S. Postal Inspection Service’s Phoenix Division. “The joint investigation with our partners at the Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigation Division; and the U.S. Attorney’s Office highlights just how devastating these types of investment fraud cases can be for the victims.”

The indictment alleges that from June 2005 through December 2008, through a web of entities and bank accounts he created and operated, Wise fraudulently induced victims to “invest” approximately $66 million with false promises that he could earn victims high-yield rates of return by making short-term, high-interest hard money loans in real estate ventures. The indictment also alleges that Wise did not make the investments he promised to victims, but instead operated a Ponzi scheme by using money obtained from newer victims to pay off older victims. The indictment further alleges that Wise retained for his own use more than $1 million in tax funds from investor victims who were also his tax clients. During this Ponzi scheme, the indictment alleges, Wise greatly enriched himself by siphoning off around $7 million in victim funds for his own personal use and enjoyment.

Convictions for mail and wire fraud carry a maximum penalty of 20 years, a $250,000 fine, or both. A conviction for transactional money laundering carries a maximum penalty of 10 years in prison, a $250,000 fine, or both. In determining an actual sentence, U.S. District Court Chief Judge Roslyn O. Silver will consult the U.S. Sentencing Guidelines, which provide appropriate sentencing ranges. Chief Judge Silver, however, is not bound by those guidelines in determining a sentence.

An indictment is simply a method by which a person is charged with criminal activity and raises no inference of guilt. An individual is presumed innocent until competent evidence is presented to a jury that establishes guilt beyond a reasonable doubt.

The investigation preceding the indictment was conducted by the Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigation; the U.S. Postal Inspection Service; and the U.S. Department of Labor, Employee Benefits Security Administration. The prosecution is being handled by Dominic Lanza and Peter Sexton, Assistant U.S. Attorneys, District of Arizona, Phoenix.

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