In a late afternoon news conference in Sacramento, the U.S. Attorney's Office announced it has charged Anthony Vassallo for his role in a massive investment fraud scheme.
A spokeswoman for the attorney's office said Vassallo turned himself in to authorities this morning. Vassallo, 29, grew up in Pleasanton, graduating from Foothill High School in 1997 as a star athlete. He most recently lived in Folsom, Calif. where he was president and CEO of Equity Investment Management and Trading, Inc. (EIMT).
The criminal charges come on the heels of a civil complaint filed March 11 by the Securities and Exchange Commission, alleging Vassallo worked with Kenneth Kenitzer, 66, of Pleasanton, to bilk 150 investors of more than $40 million through EIMT, promising a rate of return of 3.5 percent per month with little risk of loss. Many investors he met through his church, according to the civil complaint.
The SEC has located one bank account in Redding, Calif. operated by Vassallo and containing $1.2 million, which it has frozen.
The spokeswoman said Kenitzer is still being investigated, but so far, no criminal charges have been filed against him and he has not been arrested.
"In recent months, the sluggish U.S. economy has brought to light many Ponzi schemes that are likely to cause investor losses reaching into the billions of dollars," said FBI special agent-in-charge Drew Parenti. "
"This was a classic Ponzi scheme," added IRS special agent-in-charge Scott O'Briant. "Investors were lured by false hopes and empty promises."
On the same day as the press conference, the U.S. Department of Justice unsealed court documents that detail the specific evidence they claim against Vassallo. Also named in those documents is Michael David Sanders, also known as David Dennis Sanders, 41, of Fair Oaks, Calif., who has been charged with an investor shake-down scheme. The attorney's office charged Sanders with "conspiracy, impersonating a federal law enforcement agent and attempting to extort money in connection with recovering funds for EIMT, Vassallo and others."
The criminal complaint alleges that on March 8, Sanders and at least four others met with two businessmen who had previously invested with Vassallo in an office in Folsom. Upon entering the office, Sanders and several others, allegedly wearing bulletproof vests, radio earpieces and badges, displayed guns and handcuffs. The complaint goes on to say that Sanders and his crew identified themselves as agents with the FBI, SEC and the Attorney General and told the businessman that they had until noon the next day to wire $378,000 to a bank account at a local credit union. The complaint says Sanders threatened them with search and arrest warrants if they didn't comply. Sanders appeared in court Thursday and has been released on bond. A preliminary hearing has been set for April 8. Vassallo remains in custody.
If convicted, the attorney's office said Vassallo faces up to 20 years in prison for mail and wire fraud offense; up to 20 years for money laundering; and up to 10 years for securities law violations, with fines up to twice the value of the victims' losses. Sanders faces up to five years for conspiracy, three for impersonating a federal law enforcement agent and three years for extortion.
The U.S. Attorney's Office said this case is one of four alleged Ponzi schemes that are being brought federally in Sacramento. The largest is $100 million, located in Roseville, Calif. Another one is worth $13 million, based out of Folsom; and the fourth is worth $17 million, based out of Vallejo.
For a previous story on the alleged Ponzi scheme, click here