The FBI has arrested two men in connection with a $40 million Ponzi schemein the Sacramento area, including one who allegedly posed as a federal agent to strong-arm investors into coughing up their profits.
Authorities said Friday that Anthony Vassallo, whom they identified as the ringleader, appears to have lost most of the investors' money. Much of the money was squandered on "pretty crazy" schemes promising "wild returns," said Acting U.S. Attorney Lawrence Brown. He wouldn't elaborate.
Robin Taylor, an assistant U.S. attorney, said it's doubtful officials will find much beyond the $1.2 million uncovered in a bank account.
Vassallo, 29, of Folsom, was charged with securities fraud, money laundering and other crimes, and was expected to be held without bail until a hearing Monday. He had been staying with a friend in Las Vegas but surrendered to the FBI.
Officials said Vassallo's firm, Equity Investment Management and Trading Inc. of Folsom, conned 150 investors by promising enormous profits without risk. Many of the victims, like Vassallo himself, are Mormons. The firm has been closed by court order.
In a bizarre twist, Michael David Sanders, 41, of Fair Oaks was accused of extortion and impersonating a federal agent in a confrontation earlier this month with two unidentified investors who had worked with Vassallo.
Brown said Sanders and four others, bearing guns, handcuffs, bulletproof vests and radio earpieces, stormed into a Folsom office and demanded the two investors wire $378,300.16 to a credit union account. A member of the group, speaking into his earpiece, said "one of the units" was in place at the home of one of the two investors.
The two investors asked for more time but ultimately didn't cave in to the Sanders group's demands, according to the complaint.
The complaint said the investors had been summoned to the meeting on the promise of meeting an individual interested in investing $400 million.
Taylor said it appears Sanders was trying to collect the money on behalf of other investors who had been defrauded. She said there's no evidence that Sanders was in on the Ponzi scheme itself. He was released on bond.
According to the complaint, a man identifying himself as Sanders phoned an FBI agent last month and said he used to work for the "bad guys," including Vassallo, but had switched sides and was working on behalf of investors.
While proclaiming his client's innocence, Sanders' lawyer Benjamin Galloway said, "Mr. Sanders' sole motive for all of his actions was to assist investors."