Ponzitracker

A Nevada man was arrested Friday for what authorities described as a long-running Ponzi scheme targeting elderly investors that may have bilked victims out of at least $2 million. Gary Harrison Lane, 59, was charged with twelve counts of mail fraud, as well as five counts of tax evasion, in a federal grand jury indictment unsealed in early August. Mail fraud carries a maximum potential prison sentence of twenty years per offense, while tax evasion carries a maximum 5-year term.

According to authorities, Lane was a long-time financial advisor at Bank of America Investment Services, which later merged with Merrill Lynch. There, beginning in at least May 2002, Lane targeted inexperienced elderly investors with the promise of steady annual returns of six percent through investments in United States treasury bonds with maturities of two years or less. Based on these representations, Lane convinced twelve elderly investors to entrust him with $2.1 million. After he received the money, Lane would then send each investor written documentation purportedly confirming the purchase of the promised treasury bond(s).

However, according to authorities, a treasury bond with a maturity of two years or less never had an annual return of anywhere close to six percent during the relevant time period. Additionally, there was no record of Lane purchasing the investments through his employer. Instead, Lane is alleged to have diverted investor funds to his wife, who would then in turn deposit the funds into an E*Trade owned by her. Lane never purchased any treasury bonds as promised, said authorities; instead, the purported "confirmations" were fictitious and investor funds were used for Lane's personal expenses or to make Ponzi-style payments to existing investors.

Financial advisors often face strict procedures for ensuring compliance with securities laws and regulations. These include regular disclosure of any outside business activities or unauthorized sales of securities, as well as prohibitions on targeting inexperienced or susceptible investors. These duties are serious matters for brokerages and broker-dealers, who can face liability for failure to adequately supervise rogue financial advisors. Indeed, several lawsuits appear to have already been brought and settled against Lane's former employers accusing them of failures to supervise Lane. As such settlements are often accompanied by confidentiality agreements, specifics are unavailable.