A Lakeland, Fla., man, charged federally in a $14 million Ponzi scheme that solicited Mahoning Valley investors, pleaded guilty to conspiracy to commit wire and mail fraud and to conspiracy to launder money.
Edward A. Allen, 36, entered his plea Monday before U.S. District Judge Benita Y. Pearson.
On April 5, Allen’s co-defendant, David L. Olson, 61, also of Lake-land, pleaded guilty to the same charges pertaining to events between 2006 and 2009.
Olson will be sentenced at 11 a.m. June 28.
When Allen is sentenced in late June or early July, he could be sent to prison for up to 40 years and fined up to $500,000.
But Judge Pearson said federal sentencing guidelines suggest a prison term between 78 and 97 months for Allen, who has no prior criminal record.
Allen and Olson were partners in A&O Companies, which solicited investors in the Youngs-town area and from Florida, Texas and Arizona, according to the indictment.
Investors were told A&O’s purpose was to buy residential real estate and sell it at a profit, according to the U.S. attorney’s office.
But instead, the investments were used to pay company employees’ salaries, personal expenses and purported interest payments to various investors and mortgage payments on real estate purchased on behalf of A&O by investors, court records said.
The case was investigated by the FBI and IRS and is being prosecuted by David M. Toepfer, the Youngstown-based assistant U.S. attorney, who said 40 of the scheme’s 100 victims live in Northeast Ohio.
Allen and Olson promised investors a high rate of return, in one case up to 45 percent, through monthly interest payments and gave them promissory notes totaling $14 million, the U.S. attorney said.
In the scheme, A&O made purported interest payments to some investors, which were derived from other investors’ funds, the federal prosecutor added.
The defendants told investors the notes were collateralized by Olson’s Florida lakefront property, the indictment says.
That property, purchased for about $425,000, declined substantially in value after a sinkhole developed and drained the lake in 2006, yet about $8 million in notes were collateralized by this property, the indictment says.