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NY Advisory Firm COO Pleads Guilty To Over $100 Million "Ponzi-Like" Scheme

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by Tyler Durden
Thursday, Apr 15, 2021 - 07:30 PM

The Department of Justice U.S. Attorney’s Office in the Southern District of New York yesterday announced that a managing partner and COO at New York-based investment advisory firm International Investment Group (“IIG”) had pled guilty to "investment adviser fraud, securities fraud, and wire fraud offenses in connection with an over $100 million scheme" to defraud his clients. 

Martin Silver pled guilty to perpetrating a scheme that lasted more than 10 years, the release said. He created "fictitious investments" and overvalued investments used to generate funds "to pay off earlier investors in a Ponzi-like manner," the Department of Justice said.

The release said that from 2007 to 2019, Silver conspired to defraud investors in IIG-managed funds by:

  • (i) overvaluing distressed loans held by the IIG Funds

  • (ii) falsifying paperwork to create a series of fake loans that were classified, fraudulently, as positively performing loans, and to otherwise hide losses

  • (iii) selling overvalued and fake loans to a collateralized loan obligation trust and new private funds established and advised by IIG

  • (iv) using the proceeds from those fraudulent sales to generate liquidity required to pay off earlier investors in a Ponzi-like manner.

The 63 year old pled guilty to "one count of conspiracy to commit investment adviser fraud, securities fraud, and wire fraud, which carries a maximum sentence of five years in prison; one count of securities fraud, which carries a maximum sentence of 20 years in prison, and one count of wire fraud, which carries a maximum sentence of 20 years in prison."

He will be sentenced in November 2021. 

Manhattan U.S. Attorney Audrey Strauss commented: “Today, Martin Silver admitted to participating in a sophisticated, decade-long scheme to defraud IIG funds and investors, abandoning his fiduciary responsibilities to IIG’s clients, and causing millions of dollars of losses.  My Office remains committed to policing investment advisers who seek to take advantage of their clients for personal and professional gain.”

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