Former Elk Grove Village trader gets 13 years for pyramid scheme
A former Elk Grove Village trader was sentenced to 13 years in prison and ordered to pay more than $10 million in restitution Friday for running a pyramid scheme that defrauded hundreds of victims across the country.
Kevin Carney, 51, pleaded guilty to theft, mail fraud, wire fraud and securities fraud in DuPage County court. He was sentenced by Judge George Bakalis.
Prosecutors said Carney promised his victims a 20 percent return. Using a personal trading account online, he started with people he knew in Cook, DuPage and Lake counties and then branched out to create a network involving victims in 20 states and the District of Columbia.
Altogether, more than 300 victims gave Carney $17 million and lost about $10 million. They included a soldier from Iowa who invested a $5,000 Army re-enlistment bonus, and others who maxed out credit cards, remortgaged their homes, or withdrew from IRA accounts, prosecutors said.
“Mr. Carney’s scheme promised big returns but instead only resulted in financial devastation for his victims,” Illinois Attorney General Lisa Madigan, whose office prosecuted the case, said in a statement.
The scheme was in operation from January 2007 to October 2008. Authorities said Carney claimed he could guarantee 20 percent returns through a proprietary software program he developed to identify rising stock prices ahead of the market. He told investors the system allowed him to turn stocks quickly for a small profit, which would be repeated for a larger return.
Prosecutors said Carney gave monthly statements to investors showing large gains while he actually was losing money. To perpetuate the scheme, he used funds from incoming investors to pay earlier investors, which only attracted more victims as word spread of them buying expensive items and taking pricey vacations, according to prosecutors.
Carney, formerly of Elk Grove Village, is already serving an 8-year prison sentence for a similar scam in Cook County. He was prosecuted in DuPage by Assistant Bureau Chief Edward Carter and Assistant Attorney General Edward Snow of Madigan’s Financial Crimes Bureau.