Wallingford Man Admits to Operating $1.5 Million Ponzi Scheme: Feds

WALLINGFORD, CT — A Wallingford man faces up to 30 years in jail after admitting to operating a Ponzi scheme that defrauded more than 10 people out of nearly $1.5 million, according to federal authorities.

Joseph A. Castellano, 59, pleaded guilty in Hartford federal court on Friday to fraud and money laundering offenses, U.S. States Attorney Deirdre M. Daly announced.

According to court documents and statements made in court, Castellano operated various entities out of offices in Wallingford, including Casbo Investments, Wallingford Investors Limited Partnership, AIM Realty Investors, and Castellano & Co., LLC.

Casbo Investments, located at 15 South Elm Street in Wallingford, was raided by the FBI last July and Castellano was reportedly the target of the raid.

As the owner of Castellano & Co., LLC, and as a certified public accountant, Castellano prepared federal and state tax returns for individuals and local businesses. In connection with his tax preparation business, Castellano established a base of clients to which he offered financial services and investment opportunities in addition to preparing their taxes, according to Daly.

Beginning in approximately July 2007, Castellano is accused of falsely representing to victim-investors that he had clients who were in need of capital to fund businesses or real estate development projects, but was unable to secure funding from traditional sources such as financial institutions.

Castellano allegedly told victim-investors that he would obtain for them a consistent rate of return of between approximately 6 percent and 8 percent annually on their money by taking their money and placing it with, or loaning it to, one or more of his other clients.

Castellano, through Casbo Investments, prepared and executed official-looking documents and investment contracts termed “Demand Notes,” which contained a promise to return the principal amount, with interest, at any time, according to Daly.

“In fact, there were no actual investments or investment opportunities, and the money was not invested with or loaned to other clients of Castellano,” Daly said in the press release. “Castellano diverted the funds for his own use and benefit, including making payments to other victim-investors that were falsely represented to be ‘interest’ payments. Castellano also made false statements to certain victim-investors to explain various delays in the purported interest payments.”

Through this scheme, Castellano defrauded more than 10 victim-investors of approximately $1.45 million, according to Daly.

Castellano was arrested on April 6.

Castellano pleaded guilty to one count of mail fraud and one count of money laundering. He faces a maximum term of 30 years in jail when he is sentenced on Dec. 22. He was released on a $250,000 bond pending sentencing.

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