Wallingford Man Sentenced For Operating $1.4 Million Ponzi Scheme: Feds

WALLINGFORD, CT — A Wallingford man was sentenced Wednesday to 68 months in prison for operating a Ponzi scheme that defrauded the victims out of more than $1.4 million, according to federal authorities.

Joseph A. Castellano, 59, was also sentenced to three years of supervised release following the prison term, U.S. States Attorney Deirdre M. Daly announced in a press release.

The Meriden Record-Journal reports that the judge rejected a plea deal in the case because he said it wasn’t sufficient.

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.

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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 falsely represented 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 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 wrote in the press release. “Castellano diverted the funds for his own use and benefit, including for international travel. He also used some of the invested funds to make phony ‘interest’ payments to other victim-investors.”

Through this scheme, Castellano defrauded 18 victim-investors of a total of approximately $1.45 million, according to Daly.

Multiple victims lost most of their retirement savings.

Castellano was arrested on April 6, 2016 and pleaded guilty in September to one count of mail fraud and one count of money laundering.

Castellano, who had been released on a $250,000 bond, was remanded to the custody of the U.S. Marshals Service at the conclusion of the sentencing proceeding.

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