$2 Million Investment Scam Provides Guilford Man With Return Of Five Years In Prison

Carlos Garcia, 48, of Bayberry Lane in Guilford was sentenced to prison Tuesday after pleading guilty in November to one count of mail fraud, one count of wire fraud and four counts of tax evasion, according to a press release from the U.S. Attorney's office.

Garcia also has been ordered to pay restitution in the amount of $2,061,604.42 to the victims of his scheme, and he was ordered to resolve outstanding tax liabilities with the IRS.

Law enforcement officials said Garcia posed as an investment advisor/hedge fund manager, selling shares in Paramount Equity Partners, LLC, an investment vehicle that he said would be used to invest client funds. 

After his clients sold stocks and other holdings, Garcia would ask them to endorse checks over to Garcia Capital Management LLC, which Garcia controlled, according to a release issued by the U.S. Attorney's office. Garcia also asked clients to wire money directly into Paramount Equity Partners LLC, and then he transferred those funds into Garcia Capital Management LLC, according to the release.

David B. Fein, United States Attorney for the District of Connecticut, said Garcia was sentenced Tuesday by United States District Judge Vanessa L. Bryant in Hartford to 63 months of imprisonment, followed by three years of supervised release, for operating a $2 million investment scheme.

“This sentence should serve as a warning to any individual who intends to operate an investment fraud scheme,” U.S. Attorney Fein said in the prepared release.  “The Connecticut U.S. Attorney’s Office and our federal, state and local law enforcement partners are committed to investigating financial fraud schemes and prosecuting those involved in order to seek justice for victims.”

According to court documents and statements made in court,

• From at least as early as 2002 until 2009, Garcia said he was an investment advisor/hedge fund manager, selling shares in “Paramount Equity Partners, LLC," the release said.
• Instead of investing the funds as promised, Garcia sed clients’ money to pay for personal expenses for himself and his family, and to make “lulling” payments to clients. 
• Through this scheme, Garcia victimized at least 10 people and caused a net loss to his victims of more than $2 million.
• As part of the scheme, Garcia created and mailed bogus account statements and correspondence to his client victims that discussed the returns they were earning on their investments. 
• In some cases, Garcia also created false federal Internal Revenue Service Form 1065 Schedule K-1s so that victims filed false tax returns and paid taxes on returns they never earned. Garcia also willfully evaded the payment of income taxes for the tax years 2005, 2006, 2007 and 2008, resulting in a tax loss to the government of $38,145.

This case was investigated by the Internal Revenue Service – Criminal Investigation and the Federal Bureau of Investigation.  The case was prosecuted by Assistant United States Attorney Susan L. Wines.

In December 2010, the U.S. Attorney’s Office and several law enforcement and regulatory partners announced the formation of the Connecticut Securities, Commodities and Investor Fraud Task Force, which is investigating matters relating to insider trading, market manipulation, Ponzi schemes, investor fraud, financial statement fraud, violations of the Foreign Corrupt Practices Act, and embezzlement. 

The Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service – Criminal Investigation; U.S. Secret Service; U.S. Postal Inspection Service; U.S. Department of Justice’s Criminal Division, Fraud Section and Antitrust Division; U.S. Securities and Exchange Commission (SEC); U.S. Commodity Futures Trading Commission (CFTC); Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Office of the Chief State’s Attorney; State of Connecticut Department of Banking; Greenwich Police Department and Stamford Police Department.