A tax preparer in the Bronx, N.Y., has pleaded guilty to operating a $4.8 million Ponzi scheme and faces up to 11 years in prison.
Robert H. "Bob" Van Zandt pleaded guilty Monday to a 33-count indictment lodged against him, including securities fraud and grand larceny. In exchange for his plea, Justice Martin Marcus agreed to sentence Van Zandt to between three and two-thirds to 11 years in prison.
Securities fraud is a serious crime which my office will prosecute to the fullest extent of the law," New York State Attorney General Eric Schneiderman said in a statement Tuesday. “Mr. Van Zandt stole his victims’ life savings, forcing some of them to re-enter the workplace after their retirement and others to rely on government assistance to survive. The perpetrators of this and other Ponzi schemes will face justice.”
Van Zandt ran the Van Zandt Agency, a tax-preparation business in the Bronx, for decades. Starting in 2007, Van Zandt began accepting investments from tax preparation clients. In many cases, these investors handed over their entire life savings to Van Zandt. Van Zandt solicited money from unsuspecting clients, promising guaranteed rates of returns. Starting in approximately 2008, Van Zandt’s alleged investment opportunities turned into a purely Ponzi-style scheme, according to prosecutors.
Van Zandt guaranteed high rates of return to new investors, promising to invest their money in lucrative securities, including real estate projects that were, in fact, impossible to build. The money was not invested as promised, but rather was used to pay previous investors or diverted for personal expenditures.
The scheme fraudulently raised more than $4.8 million between 2008 and 2012 from the 29 investors named in the indictment.
Prosecutors contend that Van Zandt abused his position as a manager of a tax preparation business to identify and lure new investors, targeting victims who had large amounts of money available, such as retirement funds, savings, inheritances or settlements. Van Zandt also allegedly made materially false representations and failed to disclose material facts to his investors in order to induce them to make investments, which ranged from $25,000 to nearly $900,000.
The funds were allegedly deposited into accounts affiliated with the Van Zandt Agency or controlled by Van Zandt and then commingled and transferred between accounts as needed to pay investors, business expenses, and for Van Zandt’s personal use. Contrary to the promissory notes or shareholder agreements that Van Zandt gave to his victims, the funds were never legitimately invested. In particularly egregious cases, although Van Zandt promised that investment funds would be used to purchase government bonds or corporate securities, no such bonds or securities were ever purchased for the victims. Van Zandt is set to be sentenced on January 5.
The case stems from an investigation initiated by the Attorney General’s Investor Protection Bureau in 2010. A civil lawsuit, filed by the Investor Protection Bureau in 2012 against Van Zandt and other individual and corporate defendants, is still pending. The Attorney General's civil lawsuit seeks $35 million in restitution for over 250 investors defrauded in the scheme, including the 29 investors named in the criminal indictment.
