An eight-count federal indictment has been returned charging a Uniontown man for his role operating a Ponzi scheme in which 19 investors were defrauded out of approximately $5.5 million, law enforcement officials said.
“This defendant took advantage of people who trusted him and used their hard-earned money to fund his lifestyle,” said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
“Geoffrey Nehrenz callously preyed on the desires of 19 individuals to make wise investments and duped them out of millions,” said Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland Office. “The FBI will continue to root out fraudsters like Mr. Nehrenz.”
“Promoters of Ponzi schemes prey upon trusting investors and then steal their hard-earned money. Investors should be wary that programs promising unbelievable returns on investments should be looked at carefully,” said Kathy A. Enstrom, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. “Remember the old cliché: ‘If it’s too good to be true, it probably is.’”
Between October 2009 and September 2013, Nehrenz promoted and sold investment contracts to clients through Keystone Capital Management, LLC (“KCM”) an investment adviser company located in Uniontown, which is an Ohio limited liability company registered as an investment adviser firm, but not registered with the Securities and Exchange Commission. Nehrenz was the managing member, president, and chief executive officer of KCM, according to the indictment.
Nehrenz induced 19 clients to invest in Keystone by promoting KCM’s ability to generate positive investment returns in equity markets while mitigating risk. He falsely represented to potential clients that their funds would be pooled, invested during the day in large- and mid-capitalization, publicly traded U.S. securities exclusively, and converted to cash overnight. Rather than investing the funds, Nehrenz used client money to pay his personal expenses, to pay business expenses to promote and prolong his investment scheme, and to make speculative, high-risk trades with domestic and overseas private placement vehicles without his clients’ authority, transactions known as “side pocket investments,” according to the indictment.
Nehrenz induced at least 19 clients to invest approximately $7 million into his hedge fund, resulting in losses to his clients in the amount of approximately $5.5 million.