N.Y. Jewelry Wholesaler Guilty in $200 Million Ponzi Scam

(Bloomberg) -- A New York jewelry wholesaler admitted he ran a $200 million Ponzi scheme, falsely telling investors he was using their money to buy jewelry at “closeout” prices and reselling it at markups of 30% to 70%.

Instead, prosecutors said, Gregory Altieri admitted on Wednesday that he used money from new investors to repay earlier investors.

Altieri, of Melville, pleaded guilty in federal court in Brooklyn to wire fraud and securities fraud and faces as long as 20 years in prison.

“With today’s guilty plea, Altieri is held accountable for duping dozens of investors, including retirees living off their pensions,” Seth DuCharme, the acting U.S. attorney in Brooklyn, said in a statement. “The defendant’s lies have caught up to him and he will now face the consequences of his fraudulent scheme.”

Purported ‘Returns’

Altieri kicked off his scheme in 2017 by soliciting $75 million to $85 million from more than 80 investors in an entity he controlled called LNA Associates, the U.S. said. His victims were based in the New York City boroughs of Queens and Staten Island as well as in Long Island and elsewhere, according to prosecutors.

Altieri initially purchased real jewelry with investors’ money, but by May 2018 he had begun using funds from new investors to pay earlier ones, falsely telling them the payments were returns on their investments, the government said.

“These purported ‘returns’ were used by Altieri to convince the earlier investors to keep their money with LNA Associates by ‘rolling over’ their funds into new investments based on false promises to use this money to purchase additional jewelry,” prosecutors said.

The scheme fell apart by January 2020, when Altieri stopped making payments to investors.

The case is U.S. v. Altieri, 20-cr-00249, U.S. District Court, Eastern District of New York (Brooklyn).

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