Sugar Grove man accused in 'massive' Ponzi scheme
Legendary Illinois high school boys basketball coach Gene Pingatore filed suit against his longtime friend and investor Tuesday, claiming he was swindled out of half a million dollars in a potentially far-reaching pyramid scheme.
The lawsuit filed in Kane County Circuit Court accuses broker Algird M. Norkus of Sugar Grove of converting bogus promissory notes over a period of years for personal use.
Attorneys for Pingatore said the St. Joseph High School coach is just one of potentially dozens of investors who plan to sue Norkus and related financial institutions over combined losses currently estimated at $50 million or more.
The lawsuit comes less than a month after the Illinois Securities Department issued a temporary order suspending Norkus' registration and prohibiting him from working as an investor, according to public records. Attorney Andrew Stoltmann, whose law firm represents Pingatore, said the FBI also is investigating.
"The Ponzi scheme run by Mr. Norkus was massive," Stoltmann said. "As bad as his conduct was, it was the lack of supervision that allowed the scam to flourish." Pingatore, 73, of Westchester, who holds the title of all-time winningest boys basketball coach in the state, said he befriended Norkus about 45 years ago and began investing with him in the late 1970s.
In 2007, Pingatore said, Norkus persuaded him to begin putting retirement money into promissory notes as way to protect investments during the economic downturn.
Pingatore said he put in about $500,000 over several years with the guarantee that he would earn 13.5 percent when the notes came due after five years.
"I didn't question it - it sounded great," he said. "Who wouldn't grab that if you trusted the guy?"
Pingatore said he and other investors went to authorities last month after they lost track of Norkus.
According to the order suspending Norkus' registration, at least 15 investors had given him $1.5 million total.
"We found out when we were interviewed by the FBI that this wasn't the first incident," Pingatore said. "We didn't realize how large it was. We're finding out it was pretty big."
Attempts to reach Norkus, of the 500 block of Willow Street, were unsuccessful Tuesday. A phone at his listed company, Financial Update Inc. in Oak Brook, was disconnected.
Pingatore's lawsuit also names Norkus' former employer, Madison Avenue Securities in Delaware, as a defendant. The suit claims the company, which terminated Norkus on Aug. 24, failed to react to numerous red flags that indicated he was committing fraud.
A message left with the company was not returned Tuesday.
Norkus has yet to contest the temporary order suspending his registration. Tanya Solov, director of the Illinois Securities Department, said the order would be permanent if Norkus does not request a hearing within 30 calendar days of its issuance on Aug. 27.
An FBI spokeswoman would not comment on whether Norkus is under investigation.
Investing red flagsSome tips financial advisers stress to avoid getting duped when investing:bull; Always check your adviser's regulatory background with the Illinois Securities Department, under the Illinois Secretary of State's Office, at cyberdriveillinois.com/departments/securities/home.html. You can also write to 69 W. Washington St., Suite 1220, Chicago, Ill., 60602. For additional information, call (312) 793-3384 or (800) 628-7937.bull; Never make checks payable to anyone other than the brokerage firm.bull; Check statements for unauthorized withdrawals.bull; Be suspicious of promises of large returns.SOURCE: Attorneys, Illinois secretary of state's officeVictims soughtThe Illinois Securities Department is looking for investors who believe they may have been victimized by Sugar Grove broker Algird Norkus. To make a report, call (312) 793-3384.