Woman Pleads Guilty to Operating Real Estate Ponzi Scheme

Allison Tussey —  March 3, 2014 — Leave a comment

Laurie Schneider, 39, pleaded guilty at the federal courthouse in Central Islip, New York, to wire fraud.

The proceeding took place before United States District Judge Dennis R. Hurley. When sentenced, Schneider faces up to 20 years in prison. As part of her plea agreement with the government, Schneider agreed to a $1 million money judgment payable to the United States.

According to court filings and facts presented during the plea proceeding, Schneider used two shell corporations to operate a $6.9 million Ponzi scheme to steal money from unsuspecting investors. Schneider began accepting money in September 2006 from individuals seeking to earn profits on investments in overseas machinery and equipment deals and real estate on Long Island.

Schneider operated a shell company incorporated as Eager Beaver Realty LLC. Schneider touted Eager Beaver’s ability to purchase and sell real property on Long Island that was in foreclosure proceedings or otherwise available to Eager Beaver at significantly low prices. Schneider provided investors with written investment agreements in which she falsely represented and guaranteed that 100 percent of the invested funds would be used by Eager Beaver to purchase foreclosed real property for resale at prices that would enable Eager Beaver to pay as much as a 20 percent return on investment along with a 100 percent return of principal. To further the scheme, Schneider used a portion of the money that she obtained from Eager Beaver investors to pay returns to early investors in the China Deals.

In reality, Eager Beaver earned no profits. In fact, Schneider was operating a Ponzi scheme, paying returns to early investors using money that she fraudulently obtained from later investors. In addition, Schneider diverted some of the investors’ money to pay personal expenses, including car payments on luxury automobiles and country club dues.

Schneider also operated a shell corporation called Janitorial Close-Out City Corp. Schneider falsely represented to investors that Janitorial Close-Out bought industrial equipment and machinery manufactured by companies in China for resale in the United States. In order to lure investors, Schneider, among other things, falsely represented that (1) she personally guaranteed varying high rates of return on investments of up to 60 percent, (2) she had a business contact with strong ties to companies in China that manufactured industrial equipment and machinery, and (3) she would be able to buy the Chinese-made industrial equipment and machinery at wholesale prices which Janitorial Close-Out would later resell in the United States at a 15 to 60 percent profit over a short period of time.

The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office.

“Laurie Schneider played the part of a successful entrepreneur, willing to help others invest in equipment and machinery deals as well as Long Island real estate. In reality, she was a con artist, using lies and false assurances to bilk unsuspecting investors out of millions of dollars. Schneider ran a classic Ponzi scheme, using investor money for her own selfish purposes,” stated United States Attorney Lynch. “This office is committed to vigorously investigating and prosecuting individuals who are responsible for perpetrating financial crimes on the residents of our communities.”

FBI Assistant Director in Charge Venizelos stated, “By creating two different fraudulent shell companies and falsifying her connections with foreign companies to potential investors, Schneider was unfortunately able to swindle millions out of innocent investors promising big returns for their backing. Today’s guilty plea also promises a big return for Schneider’s criminal actions—a million-dollar judgment and a possible sentence of 20 years in prison. The FBI remains committed to protecting the investing public from perpetrators who seek to commit financial crimes.”

The government’s case is being prosecuted by Assistant United States Attorney Michael P. Canty.

Allison Tussey

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