Former Manhasset trader sentenced for $19M Ponzi scheme – Manhasset Times – The Island Now
Just short of a year after he pleaded guilty to wire fraud and securities fraud, a former Manhasset man has been sentenced to prison for defrauding victims of $19 million in a Ponzi scheme, according to the U.S. District Court for the Southern District of New York.
Paul A. Rinfret, formerly of Manhasset and formerly the owner and operator of the firm Plandome Partners LLC, was sentenced to 63 months in prison by U.S. District Judge Gregory H. Woods on Tuesday.
Investors in Plandome Partners, which the complaint says was founded in 2011, were led to believe that all of their funds would be for trading futures contracts on the Standard & Poor’s 500 index, the initial Homeland Security investigations complaint said. Only a small amount of that money was traded, according to the complaint.
“As alleged, Paul Rinfret willfully and continually defrauded his investors, the very people he was tasked with serving, in a multimillion-dollar Ponzi scheme that served to enrich only him,” said Angel M. Melendez, special agent-in-charge of the New York field office of Homeland Security investigations, said at the time.
The scheme took place from at least May 2016 to June 2019, according to the Homeland Security investigations complaint. A complaint filed last year by the Securities and Exchange Commission said it began in late 2013.
One of the brokerage accounts Rinfret said Plandome Partners traded with did not exist, while two others were closed when Rinfret said he was using them, authorities said.
The trading Rinfret actually did with the funds led to losses, but he told the investors the investments were performing well using false monthly account statements and brokerage account statements, officials said.
At least six investors were victims of the scheme, the initial complaint said, and most of them lived in Manhattan.
“As is my custom of reporting to you after large market moves, I am pleased to announce a 2.15 percent gross gain today,” Rinfret wrote in a May 17, 2017, email to one of the victims, according to the complaint.
At the time of that email, the victim’s money had not been traded at all, the complaint said.
Several of the victims tried to get their money back in February and April of this year, the document said.
The initial complaint also documents an April 5 phone call between Rinfret and one of the victims, who was seeking $5 million back. Rinfret told the victim that he had lost all of the victim’s money, and that his son had been creating the monthly statements using information Rinfret had fabricated but that he did not tell his son the information was false.
Rinfret said he had a new algorithm that would raise funds to make up for what he said had been losses because of his previous trading strategy, according to the complaint.
He asked another victim for $250,000 that he said would make enough money under the new algorithm to pay back all of the investors, according to the complaint.
Throughout the scheme, Rinfret presented himself as semi-retired, and the complaint said he used most of the victims’ money to purchase luxury goods and high-end vacation rentals for himself and his family members. Investigators said he used the Plandome Partners account to spend almost $50,000 on a luxury Hamptons vacation rental, more than $40,000 on jewelry, and tens of thousands of dollars on an event venue where his son held his engagement party.
Acting Manhattan U.S. Attorney Audrey Strauss said in a statement that Rinfret had been “brought to justice for callously lying to investors.”
“Rinfret told investors his investment returns were excellent, when in fact he failed to invest investor funds as promised, generated losses when he did invest, and diverted the majority of investor funds to his personal use and to repay investors in a Ponzi-like fashion,” Strauss said. “We will continue to aggressively pursue frauds like this one, which caused millions of dollars in losses, in order to preserve investor confidence in our capital markets.”
A separate civil lawsuit against Rinfret by the SEC, filed at the same time as the criminal case, was voluntarily dismissed “with prejudice” by the agency on July 28. Court records also show that Rinfret twice filed for bankruptcy in the past year following the charges.
Rinfret is the latest North Shore resident to be charged or sentenced for financial crimes, following Frankie Russo of Roslyn, one in a group charged with attempting to defraud lottery winners of over $107 million; Daniel Kamensky of Roslyn, a hedge fund founder charged with creating an alleged scheme to profit off the bankruptcy of luxury retailer Neiman Marcus; Michael Kohn of Sands Point, a former lawyer charged with stealing $150,000 from three of his clients; and Leslie Scharf of Roslyn, who pleaded guilty to grand larceny for stealing $6 million from retail company Shoplet, for which he served as general counsel and senior vice president of business development.
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