Ex-Crystal Lake man charged in $34 million Ponzi scheme

 
 
Updated 11/2/2011 12:35 PM

A former Crystal Lake man has been charged as a new defendant in a pending Ponzi scheme case that caused losses of about $34 million, authorities said.

Alfred Gerebizza, 56, now joins co-defendant Daniel Spitzer, 51, of Barrington to face charges that the two swindled about 400 victims into investing more than $105 million to fund their scheme, authorities said.

                                                                                                                                                                                                                       
 

According to a federal indictment, Gerebizza acted as a sales agent and trader for a dozen investment funds purportedly operated in the U.S. Virgin Islands under the title of "Kenzie Funds."

Gerebizza and Spitzer misused the money they raised for their own benefit and to make Ponzi-type payments totaling about $71 million to certain investors, according to the U.S. attorney's office.

The men informed investors their money would be used primarily in foreign currency trading, that the Kenzie Funds had never lost money and had achieved profitable historical returns, according to the indictment.

Between 2004 and July 2010, the defendants misappropriated a significant portion of the $105 million, causing losses of about $34 million, according to the U.S. attorney's office.

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Gerebizza was charged with 10 counts of mail fraud and six counts of filing false individual and corporate income tax returns, while Spitzer is facing 10 counts of mail fraud. The indictment seeks forfeiture against both men of about $34 million.

In June of 2009 the defendants told investors the Kenzie Funds were worth about $250 million, while collectively the funds had only about $4 million in their bank accounts.

Gerebizza was also charged with six counts of filing false federal income tax returns between 2005 and 2007.

Each counts of mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, or a fine totaling twice the loss to any victim, whichever is greater. The tax counts alone against Gerebizza carry a maximum penalty of three years in prison and a $250,000 fine.

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