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CHICAGO (STMW) – A former Crystal Lake man has been charged in a pending federal case alleging he and another man allegedly engaged in a Ponzi scheme that defrauded about 400 investors out of $105 million.
Alfred Gerebizza was named in the indictment on Tuesday and faces 10 counts of mail fraud and six counts of filing false individual and corporate income tax returns, a release from the FBI Chicago division said.
His co-defendant, Daniel Spitzer, 51, of Barrington was charged Aug. 2 in a criminal complaint field in U.S. District Court and pleaded not guilty on Oct. 26 to eight counts of mail fraud.
Both men are accused of raising $105 million from about 400 investors. But instead of investing the funds as promised, they used the vast majority — about $71 million — to make Ponzi-type payments to other investors to keep the scheme afloat, a complaint alleges.
Gerebizza, 56, formerly of Crystal Lake was charged in the indictment unsealed in mid-October after he surrendered voluntary to authorities in Atlanta.
As part of the scheme, Spitzer used false periodic statements and schedule forms to lull investors into believing their investments were profitable and were earning positive returns, the complaint said.
But the actual return on the $105 million investors contributed to one of the funds, the Kenzie Funds, was less than one-tenth of one percent, or $91,000, the complaint said. And an SEC analysis found that from 2005-09, less than one third of the $105 million raised from investors was actually invested.
Gerebizza was a sales agent and held himself out as a trader for the Kenzie Funds. Spitzer was the principal officer and sole shareholder of the company.
The indictment seeks forfeiture against both men of about $34 million.
Each count of mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine. The additional tax counts carry a maximum penalty of three years and a $250,000 fine.
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