Forte charged in investment-fraud case

The U.S. attorney in Philadelphia filed criminal charges yesterday against Joseph S. Forte, a Broomall money manager who has admitted to defrauding nearly 80 investors of millions of dollars.

The charge of mail fraud carries a maximum sentence of 20 years in prison and a $250,000 fine, law enforcement authorities said.

Forte, 53, appeared in court without a lawyer and was scheduled to be released after posting bail of $100,000, said Patricia Hartman, spokeswoman for the U.S. Attorney's Office.

A preliminary hearing is scheduled for Tuesday.

An affidavit of a U.S. postal inspector made public yesterday provided new details on Forte's background, his operation of the fund, and his relationship with the accountant who helped him set up the investment fund.

That accountant was John N. Irwin. Irwin was not named in the affidavit.

The fund, Joseph Forte L.P., was set up after Forte, who holds an undergraduate degree in finance from Villanova University, convinced Irwin that he had a system for profitable trading in Standard & Poor's 500 futures contracts, according to the affidavit.

Forte e-mailed quarterly results to Irwin, who relied on those numbers to prepare reports for each investor, according to the affidavit of postal inspector George Clark.

"All reported returns were false in their entirety and were simply numbers that Forte fabricated," the affidavit said. Forte told investors that the fund's value at the end of September 2008 was $154.7 million. The actual balance of his trading account at MF Global Ltd. was $146,814.

Between 1998 and 2008, Forte's trading account at MF Global lost a total of $3.3 million.

Forte did little trading. He told Clark, the postal inspector, that "he halted his actual trading for long periods of time to practice using his 'trading models.' "

Forte told investigators that he raised at least $50 million from investors, though he deposited only $25.8 million in his trading account, which was closed by October, the affidavit said.

He estimated that he used $15 million of investors' contributions to pay redemptions to other investors and that he paid himself millions in fees because that was "essential to maintaining the fund's illusion of profitability," the affidavit said.

Forte continued to seek money from new investors until at least Friday, Dec. 19. The following Monday, Dec. 22, he told Clark of the fraud.

Before embarking on his investment career, Forte was a computer salesman and owner of a gym in Havertown.

But he evidently had hard times as a computer salesman, according to Brian K. Rebisz, Forte's landlord for an Upper Darby office.

Rebisz sued him in Delaware County in 1994 for back rent totaling $14,123. Rebisz said yesterday that Forte eventually paid the rent in small increments.