A St. James man was sentenced Friday to six years in federal prison for defrauding 74 people out of nearly $18 million after conning them into investing in his Ponzi scheme for almost a decade.
James Peister had pleaded guilty to securities fraud at Central Islip federal court in November.
“Peister lulled his victims into a false sense of security through empty promises of reliable growth and conservative investing,” said Kelly Currie, acting U.S. Attorney for the Eastern District of New York. “After stealing millions of dollars in inheritances and retirement savings, Peister now faces his own retirement in prison while his victims struggle to rebuild their lives.”
Prosecutors said the 63-year-old scam artist assured investors that their money would be invested safely, but he instead used the money to pay millions of dollars in redemptions to prior victims to keep the scheme afloat and to afford his luxurious lifestyle between 2000 and 2009.
He sent phony account statements to investors that falsely showed that their funds were performing well, and he submitted bogus financial statements to the investment fund’s independent auditor, authorities said.
Peister’s Ponzi scheme collapsed in the wake of the financial crisis in 2008, when he could no longer keep up with demands for redemptions from nervous investors.
He was also sentenced to three years of supervised release, ordered to pay $9.6 million in restitution to the victims and forfeited $17.9 million, including his home and his Hummer.