Fake IOUs from a Detroit cemetery business helped cover a $35 million-plus investment fraud scheme by the former head of an Atlanta-based money management firm, according to federal investigators.
More than 300 investors were affected by the alleged fraud over several years, the FBI’s and US. Attorney’s Atlanta offices said Thursday in a press release.
The federal authorities said Angelo Alleca, former CEO of Summit Wealth Management in Atlanta, pleaded guilty to conspiring with a former business partner to defraud investors from 2007 until the alleged scheme was shut down in 2012.
The firm went into receivership soon after.
Alleca, 46, of Buffalo, N.Y., allegedly used a Ponzi-like scheme involving several funds he marketed to investors to divert money to himself, his company, his business partner and to other investors to keep the scheme going and to pay personal expenses.
Also a defendant in the case is Mark Morrow, 54, of Cincinnati, who joined with Alleca in 1997 to form Summit Capital Trading, an investment firm that had offices in New York and Ohio.
In 2007, Morrow also created Detroit Memorial Partners, the firm that later sold the fake IOUs to Summit Wealth Management’s clients and others with Alleca’s help, according to investigators. Both men were charged in December with orchestrating the alleged multimillion-dollar investment fraud.
The two partners told investors the IOUs were backed by property, but they never filed any paperwork securing the debt, investigators said.
Investigators said Alleca lost much of the $35 million through securities trading, but covered up the losses with fake account statements showing profits when, in fact, there was no money in the funds.
“Instead of fulfilling promises of investments, investors were largely swindled out of their money in a Ponzi scheme which directly enriched Alleca,” said U.S. Attorney John Horn. “This case serves as another reminder that investors need to be careful, and do their research, when deciding who to trust with their hard-earned money.”
Alleca is scheduled to be sentenced Aug. 4 in U.S. District Court in Atlanta.