David B. Fein, United States Attorney for the District of Connecticut, and Kimberly K. Mertz, Special Agent in Charge of the Federal Bureau of Investigation, announced that GREGORY VIOLA, 59, of Orange, waived his right to indictment and pleaded guilty today before United States District Judge Vanessa L. Bryant in Hartford to two counts of mail fraud stemming from his operation of a Ponzi scheme that defrauded more than 50 investors of a total of more than $2.5 million.
“This defendant stole millions of dollars from more than 50 victim investors,” stated U.S. Attorney Fein. “This case serves as another reminder that the investing public must be rigorous in its due diligence when considering whether and where to place investment and retirement funds. I commend the FBI, the Stamford Police and the Connecticut Department of Banking, all members of our Connecticut Securities, Commodities and Investor Fraud Task Force, for bringing this defendant to justice.”
According to court documents and statements made in court, VIOLA, who was not a licensed investment adviser, operated an investment business in Orange, Conn. From approximately 2007 to July 2011, VIOLA engaged in a scheme to defraud investors who had provided him with investment funds. As part of the scheme, VIOLA used funds obtained from investors to make payments to earlier investors. In order to prevent his investors from becoming aware that he was using new investor funds to make returns to older investors, VIOLA created and mailed fraudulent online account statements that falsely portrayed the value of investment accounts.
As of May 2011, VIOLA falsely represented to victim investors that they had more than $10 million on account. In truth, $10 million in funds did not exist, and the funds that did exist were not fully invested in online trading accounts but were commingled with funds in VIOLA’s own personal bank accounts. In addition to paying earlier investors with invested funds, VIOLA also used invested funds to pay personal expenses, including his mortgage.
When he is sentenced, VIOLA faces a maximum term of imprisonment of 40 years, a maximum fine of more than $5 million, and an order of restitution.
VIOLA was arrested on August 11, 2011.
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