A former investment advisor is facing seven and a half years in prison after being convicted in connection with an apparent Ponzi scheme that defrauded clients of millions.
Last October, John Masanotti Jr., the former owner and managing director of investment firm Middlesex Group LLC, pled guilty to one count of wire fraud and one count of tax evasion, after being charged with both criminally, and civilly by the U.S. Securities and Exchange Commission (SEC) in 2023.
According to court filings, starting in 2016, Masanotti duped investors in a pooled investment fund (the Middlesex Fund) that, he said, would invest in foreign currency and other assets — but was actually used to pay personal expenses, and to finance returns to early investors.
The SEC’s complaint alleged that the scheme took in more than US$5.9 million from investors, primarily seniors.
To sustain the scheme, Masanotti also allegedly provided clients with fraudulent account statements from Middlesex that showed fake investment returns.
He also failed to report more than US$3 million in income between 2016 and 2022, and made false statements to the FBI in an effort to obstruct the agency’s investigation, U.S. authorities alleged.
Now, Masanotti has been sentenced to 90 months in prison by a U.S. district court judge. He also agreed to pay US$4.4 million in restitution and to pay back taxes and penalties arising from his tax evasion.
Masanotti was released on a US$100,000 bond, and is required to report to prison on March 19.