The case against accused Ponzi schemer and St. Thomas and Illinois resident Daniel Spitzer took a major twist last month with federal officials arresting Spitzer’s Illinois business associate, Alfred Gerebizza, charging him as a co-conspirator in the purported $105 million scam.
In June 2010, the SEC filed a civil complaint against St. Thomas resident Daniel Spitzer alleging he bilked investors out of $105 million in an elaborate Ponzi scheme through his company Kenzie Financial Management.
Spitzer was arrested on federal mail fraud charges and has been out on bond, awaiting trial.
Gerebizza turned himself in and was arrested in Atlanta, Ga., Oct. 4, according to court documents. A bond hearing was scheduled for Nov. 3.
Kenzie Financial Management was a recipient of generous V.I. Economic Development Commission tax benefits, while allegedly perpetrating this massive fraud; the company’s EDC certificate was suspended at Spitzer’s initiative and has since expired.
Federal officials filed a new, superseding indictment Sept. 28, naming Gerebizza, 56, of Crystal Lake, Ill. and Palm Beach, Fla., as a co-defendant, saying Gerebizza acted as Spitzer’s partner creating sham corporations to hide money, selling fraudulent investment instruments for Spitzer, and issuing false annual statements to deceive and defraud investors.
The two "fraudulently obtained over $105 million from over 400 investors, misappropriated a significant portion of the funds, including to make about $71 million in Ponzi-type payments, and ultimately caused victims to suffer losses totaling approximately $34 million," prosecutors say in the superseding indictment.
The new indictment seeks forfeiture of $34 million allegedly paid to, and possibly still held by, Gerebizza.
While many of the charges apply to both Gerebizza and Spitzer, Gerebizza is also charged with an array of tax crimes for allegedly asking an undercover U.S. Internal Revenue Service agent to secretly repatriate funds into the U.S. from offshore bank accounts to evade taxes, and for filing false income tax returns to hide income.
Both Spitzer and Gerebizza are facing at least 30 years in prison under federal sentencing guidelines, according to court documents.
