Illinois Man Sentenced to Sixty-Three Months in Prison for $9 Million Ponzi Scheme

An Illinois man received a sixty-three month prison sentence after pleading guilty to a Ponzi scheme that took in more than $9 million from victims. Algird M. Norkus, 67, of Aurora, Illinois, pled guilty earlier this year to mail fraud, a charge that carried a potential maximum sentence of twenty years in prison. However, citing his extraordinary cooperation once he learned a criminal investigation had been opened and the ensuing taxpayer funds that were saved as a result, prosecutors agreed to recommend the lower range of federal sentencing guidelines.  A parallel civil enforcement proceeding instituted by the Securities and Exchange Commission remains ongoing.  

Norkus operated Financial Update, Inc. ("Financial Update"), which was headquartered in Oakbrook, Illinois.  The company was founded by Norkus in 1987.  Through Norkus, Financial Update purported to operate in the insurance business, and solicited investments to fund its business operations.  Issuing promissory notes to investors that promised above-average returns ranging from 11% to 24%, investors were told that their funds would be used to purchase lists of individuals who had been refused coverage from other insurance companies and then attempt to sell insurance to those persons.  Many of the investors were friends or neighbors of Norkus, and at least one met Norkus through a seminar hosted by an insurance company.  In total, Financial Update issued over $9 million in promissory notes.  

However, instead of using investor funds to operate Financial Update, Norkus operated a Ponzi scheme that used incoming investor funds to pay returns to existing investors.  Investor funds were also diverted for Norkus' personal use, including the payment of his mortgage and the purchase of a car.  The scheme began to unravel in 2010, and when confronted by several investors after missing a scheduled interest payment, Norkus confessed that he was running a Ponzi scheme.  

After completing his sentence, Norkus must serve three years of supervised release.  He must also pay $4.6 million in restitution to 52 victims.  

A copy of the SEC Complaint is here.