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New York investment fraud: 2 men charged with fraud for $2M “ponzi scheme”

New York business litigation attorney alert: 2 Westchester County accountants accused of $2 million fraud, investments in bunk accounts.

07/23/2010 // West Palm Beach, FL, USA // Tara Monks // Tara Monks

New York, NY – Two Westchester County accountants face charges of defrauding investors for over $2 million through selling phony shares in a dormant Tennessee pipeline and other bogus investments, as reported by The Journal News.

Laurence Brown, 63, of Katonah, and his business partner Ronald Mangini, 61, of Mount Kisco have been charged with pocketing investments. Brown faces charges from the U.S. Attorneys Office and the U.S. Securities and Exchange Commission. Mangini only faces charges from the SEC.

According to the complaints, the two men took $1.6 million in investments made through Marshall Granger & Co., their Armonk accounting firm. The profits allegedly went into their own bank accounts and to those of their relatives. It is alleged that $100,000 went to fund Brown’s daughter’s hobby as an amateur equestrian.

According to George Canellos, director of the SEC’s New York office, “Brown and Mangini not only deceived investors into making investments in a pipeline that was not producing gas at all, but they stole the identity of a company owned by a client in order to do it.”

The pipeline Infinity Reserves – Tennessee Inc. has been inactive for a decade.

The SEC complaint claims that Brown and Mangini took in $2.1 million and only returned $136,000 in interest to some investors, in what they called “classic Ponzi scheme fashion.”

Investigators also point out Brown’s 37-year-old daughter with the equestrian hobby, Sloan, was a bookkeeper at the Armonk firm.

The scheme supposedly ran from April 2008 to June 2010, and targeted 13 of the firm’s clients, including at least six who held “long-standing relationships” with Marshall Granger.

The SEC will seek fines, penalties and permanent injunctions against both men.

Brown faces charges of money laundering, wire fraud and securities fraud from the U.S. Attorneys Office.

He faces up to 20 years in jail for the top charge.

It was not clarified if Brown’s daughter Sloan will be charged in connection with the scheme.

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