Sunday, December 28, 2014

Villanova man admits guilt in running $12M Ponzi scheme

A Villanova man pleaded guilty in federal court yesterday to charges in connection with running a $12-million Ponzi scheme.

Stephen Michael Alexander, 59, pleaded guilty to two counts of wire fraud and money laundering.

U.S. District Judge Timothy J. Savage set sentencing for June 16. Alexander could face up to 97 months behind bars, based on stipulations in his plea agreement.

He was released on $50,000 unsecured bond and ordered not to travel outside the U.S.

Authorities said Alexander had fleeced 15 friends and family members of more than $12 million, and still owes victims about $7.5 million.

The feds seized more than $407,000 in cash from two Alexander trading accounts. Also he has agreed to forfeit proceeds from the sale of three properties he owns on North Spring Mill Road in Villanova, including the seven-bedroom, five-bathroom mansion he lives in.

Those monies will be used to repay victims.

Alexander told investors he ran his own hedge fund called Hartford Investment Inc.

He invited various friends to allow him to manage their money and told them that he would put their money in an individual account and would make trades on their behalf in exchange for a 10 percent commission on the gains he made at the end of the year.

But the government's plea memo said once victims sent or wired money to Hartford's account, Alexander typically transferred the money into his own trading account or his personal bank account.

Alexander kept his scheme rolling along by sending victims monthly financial reports showing bogus earnings, the plea memo said. Alexander either lost money on investments or used it for his own personal living expenses, authorities said.

He scammed one victim, identified in the plea memo as "C.S.," of $7.5 million.

In January 2007, authorities said Alexander sent C.S. an e-mail in which he said he had managed $300 million for 28 clients. The plea memo said Alexander had told C.S. he had about $17 million of his own funds invested in his hedge fund.

Alexander told C.S. in the e-mail that returns on client investments in 2006 ranged from 17 percent to 38 percent, with most garnering 24 percent to 27 percent returns.

Authorities said that C.S.'s initial investment with Alexander was for $500,000 in July 2007, and that over the next two years, C.S. invested $7.5 million.

 

MICHAEL HINKELMAN hinkelm@phillynews.com 215-854-2656
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