Ex-Nassau Trader Admits Using Investor Money To Fund Lavish Life

MANHASSET, NY — A former Wall Street trader from Manhasset has pleaded guilty to running a Ponzi scheme after authorities said he bilked investors out of $19 million, telling them he was investing their money but instead spent it on jewelry, cars and a house in the Hamptons.

Paul Rinfret, 70, pleaded guilty to wire fraud and securities fraud, federal prosecutors announced Tuesday.

Geoffrey Berman, a Manhattan federal prosecutor, said in a news release that Rinfret "callously lied to investors."

"He lied about his past returns to get them to invest," Berman said. "He lied about having invested all of their money, when he was actually spending much of it on things like jewelry, cars, and a house in the Hamptons. To keep investors appeased, Rinfret lied about how their money was growing."

The scheme started in at least 2016 and continued until this year. Rinfret used an entity called Plandome Partners L.P. to defraud potential and actual investors for his own and his family's personal gain, prosecutors said.

He told potential investors they could invest in the company by buying limited partnership interests. When courting them, he lied and said he would use all of their investment money to trade futures contracts tied to the Standard & Poor's 500 index using a propriety trading algorithm he had created. He would charge a fee of about 25 percent of the net profits on the trades.

Six people were bilked in the scheme, prosecutors said. In one case Rinfret said Plandome Partners traded through certain brokerage accounts — one of which didn't exist, and two of which were not open when he purported to be trading in the accounts, prosecutors said.

Despite telling investors all of their money was being invested, prosecutors said Rinfret only used a small amount for trading. He used most of the money to buy high-end items and vacation rentals, including $50,000 on a luxury Hamptons vacation rental, more than $40,000 on jewelry, and tens of thousands of dollars on an event venue for his son's engagement party.

Furthermore, the money Rinfret used for trading generated losses, prosecutors said. To prevent investors from trying to get their money back — and to get them to fork over even more — he lied about how their investments were growing by emailing bogus and doctored monthly account statements. The victims were also sent phony brokerage account statements.

Rinfret faces up up to 20 years in prison for wire fraud and 20 years in prison for securities fraud when he is sentenced Feb. 10.