Paul Rinfret, sentenced for $19M Ponzi scheme
Just short of a year after he pleaded guilty to wire fraud and securities fraud, a former Manhasset man has been sentenced to prison for defrauding victims of $19 million in a Ponzi scheme, according to the U.S. District Court for the Southern District of New York.
Paul A. Rinfret, formerly of Manhasset and formerly the
owner and operator of the firm Plandome Partners LLC, was sentenced to 63
months in prison by U.S. District Judge Gregory H. Woods on Tuesday.
Investors in Plandome Partners, which the complaint says was
founded in 2011, were led to believe that all of their funds would be for
trading futures contracts on the Standard & Poor’s 500 index, the initial
Homeland Security investigations complaint said. Only a small amount of that
money was traded, according to the complaint.
“As alleged, Paul Rinfret willfully and continually
defrauded his investors, the very people he was tasked with serving, in a
multimillion-dollar Ponzi scheme that served to enrich only him,” said Angel M.
Melendez, special agent-in-charge of the New York field office of Homeland
Security investigations, said at the time.
The scheme took place from at least May 2016 to June 2019,
according to the Homeland Security investigations complaint. A complaint filed
last year by the Securities and Exchange Commission said it began in late 2013.
One of the brokerage accounts Rinfret said Plandome Partners
traded with did not exist, while two others were closed when Rinfret said he
was using them, authorities said.
The trading Rinfret actually did with the funds led to
losses, but he told the investors the investments were performing well using
false monthly account statements and brokerage account statements, officials
said.
At least six investors were victims of the scheme, the
initial complaint said, and most of them lived in Manhattan.
“As is my custom of reporting to you after large market
moves, I am pleased to announce a 2.15 percent gross gain today,” Rinfret wrote
in a May 17, 2017, email to one of the victims, according to the complaint.
At the time of that email, the victim’s money had not been
traded at all, the complaint said.
Several of the victims tried to get their money back in
February and April of this year, the document said.
The initial complaint also documents an April 5 phone call
between Rinfret and one of the victims, who was seeking $5 million back.
Rinfret told the victim that he had lost all of the victim’s money, and that
his son had been creating the monthly statements using information Rinfret had
fabricated but that he did not tell his son the information was false.
Rinfret said he had a new algorithm that would raise funds
to make up for what he said had been losses because of his previous trading
strategy, according to the complaint.
He asked another victim for $250,000 that he said would make
enough money under the new algorithm to pay back all of the investors,
according to the complaint.
Throughout the scheme, Rinfret presented himself as
semi-retired, and the complaint said he used most of the victims’ money to
purchase luxury goods and high-end vacation rentals for himself and his family
members. Investigators said he used the Plandome Partners account to spend
almost $50,000 on a luxury Hamptons vacation rental, more than $40,000 on
jewelry, and tens of thousands of dollars on an event venue where his son held
his engagement party.
Acting Manhattan U.S. Attorney Audrey Strauss said in a
statement that Rinfret had been “brought to justice for callously lying to
investors.”
“Rinfret told investors his investment returns were
excellent, when in fact he failed to invest investor funds as promised,
generated losses when he did invest, and diverted the majority of investor
funds to his personal use and to repay investors in a Ponzi-like fashion,”
Strauss said. “We will continue to aggressively pursue frauds like this one,
which caused millions of dollars in losses, in order to preserve investor
confidence in our capital markets.”
A separate civil lawsuit against Rinfret by the SEC, filed
at the same time as the criminal case, was voluntarily dismissed “with prejudice”
by the agency on July 28. Court records also show that Rinfret twice filed for
bankruptcy in the past year following the charges.
Rinfret is the latest North Shore resident to be charged or
sentenced for financial crimes, following Frankie Russo of Roslyn, one in a
group charged with attempting to defraud lottery winners of over $107 million;
Daniel Kamensky of Roslyn, a hedge fund founder charged with creating an
alleged scheme to profit off the bankruptcy of luxury retailer Neiman Marcus;
Michael Kohn of Sands Point, a former lawyer charged with stealing $150,000
from three of his clients; and Leslie Scharf of Roslyn, who pleaded guilty to
grand larceny for stealing $6 million from retail company Shoplet, for which he
served as general counsel and senior vice president of business development.
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