WILTON, Conn. — A 48-year-old Wilton man pleaded guilty Monday to federal charges of using hedge fund money for his own personal use as part of a $6 million Ponzi scheme, prosecutors said.
Steven Simmons, 48, was arrested in January as part of an investigation into another defendant’s alleged reselling of tickets to "Hamilton" and other shows.
Simmons pleaded guilty in Manhattan federal court to one count of conspiracy to commit securities fraud and wire fraud, said Joon H. Kim, acting U.S. attorney for the Southern District of New York.
He faces up to five years in prison and a fine of $250,000, or twice the gross gain or loss from the offense. In addition, Simmons agreed to forfeit $6.9 million.
Between 2013 and January 2017, Simmons solicited more than $6 million in investments for a hedge fund. But he misappropriated some of these funds for his own use and knew that the hedge fund used the remainder of the funds to pay back prior investors, as part of a Ponzi-like scheme.
“Steven Simmons engaged in one of the oldest frauds in the book: using investor funds to pay back earlier investors, all while skimming funds off the top for his own personal use," Kim said. "When investors demanded the returns promised to them, they learned that the entire investment was just a scam. Now Simmons, who admitted his guilt in court today, will answer for his crimes.”
According to court filings and statements made in court, Simmons solicited investments by falsely representing to investors that their funds would be used by the hedge fund for legitimate, specified investment purposes, that they would receive specific rates of return, and that their investments would not be placed at risk or commingled with other funds.
But he failed to invest the investor monies as promised.
In one instance, Simmons solicited investment funds from one victim for the purpose of repaying an earlier investor in the hedge fund who had demanded the return of its investment.
Most of victim's funds were, within minutes of their receipt by the hedge fund, wired to the earlier investor. The following day, $50,000 was wired by the hedge fund to an account controlled by Simmons.
In a later consensually recorded conversation with a cooperating witness, Simmons expressed concern that the victim would contact the portfolio managers and learn that “there’s no . . . money.”
As part of the fraudulent scheme, Simmons also created and provided investors with false monthly statements.
Simmons will be sentenced at a date set by the court.
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