Friday, March 20, 2009

Charlottesville's Alleged Ponzi Suspect John M. Donnelly Taped By FBI

The DP reports that local alleged Ponzi suspect John M. Donnelly had phone calls recorded by the FBI.

Donnelly's wife, Deborah, is the Executive Director for UVa's Curry School of Education Campaign. She has been named as a "relief defendant," but has not been charged with wrongdoing.

Donnelly appeared in court on Thursday, March 19, but his lawyer, John E. Davidson, did not ask for a bond hearing until he and federal prosecutors are done "swapping" information. Donnelly will remain in the Regional Jail until an unspecified date in the future.

Brian McNeill reports:

In a Feb. 9 phone call, federal investigators recorded a phone conversation between Donnelly and someone identified only as “Victim #2.” Donnelly denied losing any of the investor’s money, but confirmed that he no longer possessed the money because it had all been redistributed to other investors in the form of interest payments, according to an FBI affidavit.

The affidavit quotes Donnelly as telling the investor: “I have to leave the horror at what I feel … I can’t apologize to you enough … I just have to fight to get everything back for you and I’m gonna do that.”

Two days later, another investor — identified as “Victim #1” — met with Donnelly at his office on Water Street in downtown Charlottesville. Unbe-knownst to Donnelly, the FBI was secretly listening to the conversation.

According to court filings, Donnelly owned and operated three investment companies — Tower Analysis, Nasco Tang and Nadia Capital — that collected money from at least 31 individuals who believed Donnelly was investing their money and bringing home lucrative returns. In reality, the government alleges, Donnelly conducted almost no securities trading. He was instead defrauding his investors by paying some investors returns out of principal paid by other investors, according to filings by the FBI and other federal agencies.

During the past three years, Donnelly paid himself $1 million in salary and expenses out of his investors’ money, according to court filings.

Along with the federal wire fraud charges, Donnelly also faces civil complaints by the U.S. Securities and Exchange Commission, as well as the U.S. Commodity Futures Trading Commission.

Related Reading:

FBI Taped Calls of Ponzi Scheme Suspect - Brian McNeill,
March 19 Court Appearance - The Newsplex
Donnelly's Wife Charged as "Relief Defendant" and Assets Frozen -
Real C'ville
Madoff Lite: Feds Claim Charlottesville Ponzi Scheme by Lindsey Barnes, The Hook
SEC Press Release
SEC Complaint Against John M. Donnelly
US Commodities Futures Trading Commission Press Release
SEC Press Releases - The SEC received heavy criticism for failing to stop Bernie Madoff years ago; now it seems the SEC finds Ponzi and Real Estate schemes everywhere.

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