A Fox River Grove man charged with running a Ponzi scheme that defrauded 40 investors from Illinois and several other states pleaded guilty to mail fraud this week in federal court.
According to the plea agreement, Paul Joseph Cirigliano -- also known as Paul Cirano -- could face between 110 and 137 months in prison when he is sentenced Oct. 27.
Cirigliano operated Panoptic Studios, a Wauconda company that produced video, graphics and websites. He admitted as part of his plea agreement that he began soliciting money from investors in 2004, telling them he intended to use it to purchase analog video recording equipment for the purposes of reselling it to companies in the U.S. and South America that still used analog technology. Cirigliano promised investors a return of up to 20 percent on their investment in as few as 30 days. But he never purchased the equipment. Instead he used the money to repay earlier investors and pay personal and business expenses, the plea agreement indicated.
To further the scheme, federal prosecutors say, Cirigliano sent out fictitious statements showing interest earned on the investments and encouraged investors to roll over their investments. Authorities estimate Cirigliano bilked investors of between $1 million and $2.5 million.
If the court adopts the government's recommended sentence, Cirigliano could spend more than 11 years in federal prison.
Shaun Patrick, whose first full-time job after college was at Panoptic, worked for the company from October 2009 until November 2010. Panoptic had legitimate clients and its 15 or 16 employees had booked more than 100 jobs, Patrick said.
But by August 2010, he says, business had dropped off and employees became aware the company had problems.
"It was devastating to be in a situation like that," he said.
In mid-August, Patrick said he received a text from a former Panoptic employee indicating the company had been dissolved. Cirigliano refuted the involuntary dissolution, explaining that he hadn't paid a fine, said Patrick, who currently produces videos for a Chicago agency.
Cirigliano, he said, "bullied a lot of us into following what he said and not asking questions."
Cirigliano's criminal background includes a 1991 conviction for wire fraud which resulted in a 46-month federal prison sentence. In 1992, he was convicted in a Florida court of grand theft and sentenced to 33 months in prison.
Only Cirigliano has been charged in the scheme, said Randall Samborn, U.S. attorney spokesman, adding that Cirigliano's guilty plea resolves the federal charges against him.