Syosset financial advisor charged with $5M Ponzi scheme
Jun 13, 2018
A Syosset-based financial advisor allegedly scammed at least 14 people, most of them senior citizens, in a $5 million Ponzi scheme, officials said Tuesday.
Matthew Eckstein has been charged with three counts of second-degree grand larceny, third-degree grand larceny and two counts of first-degree scheme to defraud, according to Nassau County District Attorney Madeline Singas.
He used some of the funds for a down payment for a residence in Oyster Bay Cove, complete with tennis court and swimming pool, authorities said. The district attorney has also filed a civil attachment on Eckstein’s residence.
If convicted, Eckstein faces as much as five to 15 years in prison.
His victims, officials said, are from Massapequa, Seaford, Smithtown, Melville, Staten Island, Brooklyn and Manhattan, as well as Norwalk, Conn.; Jupiter, FLA; and Redlands, Calif. They had been clients of his at a Garden City-based investment firm or were referred to him by friends or family.
“This unscrupulous financial advisor allegedly betrayed his clients’ trust when he stole their money in a multi-million dollar Ponzi scheme and even pilfered hundreds of thousands from the estates of deceased clients,” Singas said in a statement.
“The charges are even more egregious because many of the alleged victims were elderly and seeking safe investments for their retirement funds,” she added.
Eckstein “betrayed the trust placed in him by his clients to fund his extravagant lifestyle,” New York State Comptroller Tom DiNapoli said in a statement.
Back in January 2015, Eckstein convinced one victim to invest about $385,000 into a company, Conmac Funding, authorities said. This was a safe, no-risk investment, Eckstein told the client. Eckstein also assured the client that the “principal would be returned after a two-year waiting period with an additional four-percent interest similar to a certificate of deposit,” according to a press release issued by the DA’s office.
But two years later, when the client requested his money back, the person received only $26,699. Eckstein told the client that Conmac Funding was actually an insurance company and the money had to be paid back in installments. The client continued to ask for the return of the remaining principal and interest, but Eckstein stopped communicating with her.
NCDA investigators, US Postal Inspection Service, FBI, and the state’s comptroller’s office executed a search warrant in April 2018 at Eckstein’s home office. There, they found thousands of pages of financial documents and discovered that Eckstein allegedly did not invest the money into Conmac, but instead allegedly funded other business enterprises, personal purchases and paying other victims of the scheme, officials said.
Investigators claimed that Eckstein allegedly committed estate fraud while acting as the executor of the estates of two deceased clients, stealing hundreds of thousands of dollars. They also alleged that Eckstein recovered from the state comptroller’s office some unclaimed funds, with which he paid off debts instead of forwarding it to the decedent’s heirs.
“Exploiting the elderly by stealing their money is among the most incomprehensible of all financial crimes,” Assistant Director in Charge of the FBI’s New York Field Office William Sweeney Jr. said in a statement.
“As alleged, Eckstein did just that when he lured his victims in under false investment promises and refused to make good on the deals he made,” he added. “In some cases, as charged, he’s even accused of misappropriating estate funds to benefit his own interests, setting aside his legal responsibility as executor to allocate assets in accordance with the wishes of the deceased.”
The arrest, he said, “may never make things better for those who were defrauded, but it will put an end to a series of crimes that went on for too long.”
Dennis Lemke, Eckstein’s attorney, said he is reviewing the case and that he had not seen material supporting officials’ claims that he use client funds to support his lifestyle, according to published reports.
Eckstein is due back in court July 2.