CHARLOTTE AMALIE, U.S. Virgin Islands — A Virgin Islands-based financial manager ran a $105 million Ponzi scheme that defrauded 400 investors by falsely claiming to invest in foreign currencies, the U.S. Securities and Exchange Commission charged Monday.
Daniel Spitzer, 51, invested only a fraction of the money he received from investors and channeled much of the rest into offshore bank accounts, the SEC said in a civil fraud complaint.
It said he used the siphoned-off cash to pay off early investors to keep the scheme going, as well as to provide himself with a lavish lifestyle that included spending nearly $1 million at a Las Vegas casino.
The office of Spitzer’s Kenzie Financial Management Inc. office in St. Thomas recently closed down and the phone has been disconnected. It was not immediately known whether Spitzer had an attorney, and a lawyer who represented him in a previous fraud case did not immediately return a phone call seeking comment.
The SEC filed its complaint in Illinois where one of his companies, Draseena Funds Group Corp., is based and some of the investors live.
“Daniel Spitzer ran an elaborate Ponzi scheme that he disguised by moving investor money through a complex network of foreign bank and brokerage accounts,” Merri Jo Gillette, director of the SEC’s Chicago regional office, said in a statement. “He deceived investors into believing that he was using a sophisticated investment strategy that didn’t really exist.”
Peter Chan, an assistant regional director of the office, declined to say whether Spitzer might face criminal charges or to disclose the investment manager’s whereabouts. The FBI declined comment.
Business, Pages 24 on 06/29/2010