Ex-Broker Gets 17.5 Years in Prison for 'Masterminding' Ponzi Scheme

Assistant U.S. Attorney John J. Field, who handled the case in New York, and Assistant U.S. Attorney Sean A. Camoni, who handled the case in Pennsylvania, alleged that, between January 2008 and June 2018, Santillo conspired with an individual identified as C.P. and others to obtain money through their scheme.

C.P. was identified as Christopher Parris, also of Rochester, in the SEC’s complaint.

In 2007, Santillo and Parris, as equal partners, formed a business known as Lucian Development in Rochester, according to the Justice Department. Before about July 2007, Lucian raised millions of dollars from investors in Rochester and elsewhere by soliciting investments for City Capital Corp., a business operated by Ephren Taylor.

In July 2007, Santillo and Parris were advised by Taylor that their investors’ money had been lost. In response, in August 2007, Santillo and Parris agreed to acquire the assets and debts of City Capital. The acquisition proved to be “financially ruinous, with the amount of the acquired debt far exceeding the value of the acquired assets,” according to the Justice Department. Taylor was later prosecuted and convicted of operating a Ponzi scheme.

Santillo and Parris opted not to disclose the truth to investors that their money was gone, according to the Justice Department. Instead, the defendants continued to solicit ever-increasing amounts of money from new investors in an unsuccessful attempt to recoup the losses.

To find potential investors to solicit and defraud, the defendants acquired businesses from established investment advisors or brokers who were looking to exit their businesses, according to the Justice Department.

Between about 2008 and September 2017, the defendants, using money obtained from prior investors, bought the businesses of at least 15 advisors and brokers, located in Tennessee, Ohio, Minnesota, Nevada, California (5 businesses), Florida, South Carolina (2 businesses), Texas, Pennsylvania, Maryland and Indiana.

Only a small amount of investor money was actually deployed in productive investments and, when deployed, the investments yielded only meager income and either weren’t profitable or failed altogether, according to the Justice Department.

Between January 2012 and June 19, 2018, Santillo and Parris obtained at least $115.5 million from about 1,000 investors, the Justice Department said. The scheme collapsed in late 2017/early 2018. By then, the defendants had returned about $44.8 million to investors but continued to owe investors about $70.7 million in principal, according to the Justice Department.