What Do We Know About Returns Of 40 Percent A Week? Right! Ponzi Scheme

A lawyer from Newport Beach, California, Gerald M. Shaw, has pleaded guilty to wire fraud in connection with a high yield investment program that took in millions of dollars from victims who were promised rates of return as high as 40 percent a week. Gregory De Lavalette of San Diego pleaded guilty to wire fraud earlier this year for his role in the scheme. 

The indictment outlined a scheme in which Shaw and De Lavalette solicited investments from victims—some of whom were clients of Shaw’s law practice—by falsely stating that the money would be used to trade European bank instruments. The defendants allegedly told victims that their money would be held as collateral and that their money was completely safe. Shaw told victims that he had successfully completed high yield investments in the past and that he had many satisfied clients. Shaw also claimed that he traded AA-rated securities and bonds. The victims were told that their money would be refunded within 30 days of a request.
 
Shaw and De Lavalette did not invest or return any of the victims’ money, but used it for business and personal expenses. According to investigators and prosecutors, Shaw is believed to have defrauded at least 10 investors of approximately $4.5 million. De Lavalette, who worked for Shaw, is believed to be responsible for defrauding investors of approximately $395,000.
 
Shaw and De Lavalette are currently scheduled to be sentenced in December 2010 and September 2010, respectively. The wire fraud count subjects each defendant to a maximum statutory sentence of 20 years in prison and additional penalties, including restitution for their victims.