DENVER - Fake tax documents, exaggerated profit margins and empty investment promises led one Littleton man to a two-year prison sentence.
Michael B. Gale, 66, received the terms of his punishment Thursday for wire fraud and money laundering. His Ponzi scheme stole hundreds of thousands of dollars from investors and took little care to hide evidence, according to a press release from the U.S. Department of Justice, District of Colorado office on Thursday.
For more than four years, Gale posed as a commodity pool operator and took nearly $900,000 from nine different people who thought he was a legitimate CPO. Starting in Feb. 2009, he managed two futures trading accounts, representing the investor funds in both accounts as belonging to him and not any other investors or pools, the release said.
"To further the scheme, Gale lied about his past trading successes, telling some investors they could expect a 100 percent return on their investment while telling others that they could not lose on their investment," said Jeff Dorschner from the U.S. DOJ District of Colorado office. "He also provided investors false documents to encourage them to invest or stay invested."
Dorschner said that Gale provided fake tax documents to two investors and a fake trading account statement to another investor that said the value of the pool exceeded 3.5 million dollars.
Gale integrated his investors' funds with his own personal money.
"On one occasion, Gale transferred investment funds to his personal bank and subsequently transferred $100,000 of that money to the trading account, to make it appear that the funds in that account were his personal money and not investor money," Dorschner said in the release.
Sometimes, he would take funds from recent investors and use them to make partial payments to previous investors.
Despite Gale's illegal access to and use of investor funds, the investments he made lost money. He returned approximately $447,477 to investors during the course of his scheme and was charged with wire fraud and money laundering in Oct. 2013. Gale pled guilty in Dec. 2013.
District Court Judge Robert E. Blackburn, who handed down the sentence, ordered Gale to also pay $425,878.71 in restitution to his investment victims.
"Investors should always be wary and cautioned of investment proposals that promise high returns on their investment. If it seems 'too good to be true,' it is probably an investment scheme," said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office.