By Penne Usher, Special to the Folsom Telegraph
A Folsom man facing federal charges in a $40 million investment fraud scheme was released from federal custody after several of his investors put up their homes to raise bail money.
Anthony Vassallo, 29, is suspected of running a highly profitable Ponzi scheme, bilking 150 investors out of millions. Many of the victims were members of his church. He was arrested March 19.
According to Lauren Horwood, spokeswoman for the U.S. attorney’s office, Vassallo was released in early April on $500,000 bond. The bond was secured by the equity in homes owned by the three investors and the suspect’s father.
“It hasn’t all been finalized as of yet,” Horwood said. “(Vassallo’s) father, a doctor, his wife as well as the suspect’s sister’s mother in law put up their homes.”
According to Assistant U.S. Attorney Robin Taylor, who is prosecuting the case, Vassallo and others operated Equity Investment Management and Trading Inc. (EIMT) in Folsom, soliciting investors for a “hedge fund” program.
Vassallo reportedly promised investors a rate of return of 3.5 percent per month with little risk of loss, officials said.
The criminal complaint alleges that Vassallo and his cohorts used investor’s funds to make “dividend” payments to other investors and make risky loans without investor knowledge or consent.
“This was a classic Ponzi scheme,” said Internal Revenue Service Criminal Investigation Special Agent Scott O’Briant.
Although Vassallo lost virtually all of the investors’ money, and stopped trading in securities in September 2007, he reportedly persuaded investors to keep their funds on deposit by “fabricating investment information and reporting positive returns,” according to the complaint.
Vassallo is also suspected of money laundering, according to the criminal complaint filed March 18.
Investigating Special Agent Karen Ernst reported that on or about June 3, 2008 Vassallo withdrew $110,000 from one of his investment accounts and deposited the money into his personal checking account.
He then wrote a check to Lexus of Sacramento in the amount of $103,215.94. The complaint does not identify what the check was used to purchase, if anything.
In an odd twist, a Fair Oaks has been charged with conspiracy and impersonating a federal agent while attempting to extort money from Vassallo and EIMT.
The criminal complaint alleges that on March 8, Michael David Sanders, also known as David Dennis Sanders, 41, of Fair Oaks, and at least four other individuals met with two businessmen, who had previously invested with Vassallo, in an office in Folsom.
Upon entering the business, Sanders and others displayed guns and handcuffs on their belts, wore bulletproof vests, radio earpieces and displayed badges around their necks.
During the meeting, the “agents” demanded that more than $300,000 be deposited in an account at Patelco Credit Union.
Federal agents seized multiple items from Sanders’ home including bulletproof vests, badges and tax documents.
Sanders appeared in court on March 19 and has since been released on bail. He was scheduled to return to federal court at 2 p.m. April 8 for a preliminary hearing.
This case is the product of a joint investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigations. The U.S. Securities & Exchange Commission assisted with this case.