Jul 25, 2014

Danbury Investment 'Advisor' Pleads Guilty in Ponzi Scheme

Danbury investment 'advisor' pleads guilty to Ponzi scam. The following information was drawn from a press release from the U.S. Attorney's Office.

Danbury Investment 'Advisor' Pleads Guilty in Ponzi Scheme

David B. Fein, United States Attorney for the District of Connecticut, today announced that Stephen B. Blankenship, 63, of New Fairfield, waived his right to indictment and pleaded guilty yesterday before United States District Judge Vanessa L. Bryant in Hartford to mail fraud and securities fraud.

The charges arose from a long-running Ponzi scheme. Through this scheme, Blankenship defrauded at least eight investors of more than $500,000.

         “Over the course of several years, this defendant deceived investors into entrusting him with their funds, and then into believing their funds were safe and their investment accounts were appreciating,” stated Fein.  “All along, he was using those funds to pay business and personal expenses, and to pay other investors as part of a Ponzi scheme."

According to court documents and statements made in court, Blankenship owned and operated Deer Hill Financial Group, LLC, in Danbury, which he represented to be an investment management firm in the business of managing client funds and buying and selling securities on behalf of clients.  However, at no time was Deer Hill Financial Group registered with the Securities and Exchange Commission (“SEC”) as an investment company, investment adviser, broker-dealer, or in any other capacity. The company sent investors reports that appeared to show how well the money was doing in the 'investments.'

From approximately 2002 to March 2012, Blankenship falsely represented to numerous individuals that he had investment opportunities that were safe and would pay a consistent return to investors.  Blankenship had been affiliated with registered broker-dealers in California and New York, and many of his victims were his prior customers. In fact, there were no actual investments or investment opportunities, the money was not invested in publicly traded mutual funds, nor was it invested in established securities.

 Blankenship failed to invest the money as represented and instead used the victims’ funds to pay business expenses and personal expenses for travel, grocery shopping, credit card payments, mortgage payments, and improvements on his home.

Blankenship pleaded guilty to one count of mail fraud and one count of securities fraud.  Judge Bryant has scheduled sentencing for December 5, 2012, at which time Blankenship faces a maximum term of imprisonment of 20 years on each count.

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