Eric E. Resteiner Pleads Guilty to Charges of Operating a $47 Million Investment Scam, Reports U.S. Attorney

13 February 2006

A former U.S. citizen was convicted today in federal court of criminal charges stemming from his orchestration and operation of a Ponzi trading scheme from May 1997 to June 2000.

United States Attorney Michael J. Sullivan and Kenneth Kaiser, Special Agent in Charge of the Federal Bureau of Investigation in New England, announced today that ERIC E. RESTEINER, age 46, formerly of the Lyford Cay, Bahamas, pleaded guilty before U.S. District Judge Nancy Gertner to seven counts of wire and mail fraud.

At Wednesday's plea hearing, the prosecutor told the Court that had the case proceeded to trial the Government's evidence would have proven that RESTEINER, assisted by others, created and executed a scheme by which he defrauded more than 50 investors out of more than $47 million through his operation and a purported high-yield international bank trading investment program. In operating the scheme, more commonly known as a Ponzi scheme, RESTEINER told prospective investors various lies to encourage their investment in the alleged high rate of return investment that purportedly presented no risk to the investors. Among the lies made to lure investors, RESTEINER told investors that he was a licensed trader, one of only a handful of people in the world permitted to do so-called "off-balance sheet" trading; that, as a trader, he could go to top international banks and buy high-yield, high-quality debt instruments issued by banks at a discount and resell them to another bank at a premium; that these instruments were backed by Double A rated banks; that his trading program would pay an annual return of no less than 50 percent; and that the investors' principal would never be at risk because these instruments could be cashed in at the banks at any time. These representations, and others made by the RESTEINER to lure others to invest, were false and fraudulent.

As a further part of his scheme, RESTEINER recruited intermediaries or agents to refer new investors, pass on RESTEINER's lies, provide transfer instructions, and make periodic payments to investors of what they were told were the returns or interest payments on the investor's investments.

Despite the lofty assurances RESTEINER made to potential investors, either directly or through his intermediaries, RESTEINER was not a trader and he never invested the money that he, and the others working as his agents, took into the purported trading program.

Instead, RESTEINER opened and controlled various bank accounts at Barclays Bank, Nassau, Bahamas, in the names of Swiss Asset Management Corporation, Wall Street South Corporation, and Osaka, Ltd. He directed the investors funds to be deposited into these various accounts over which he maintained exclusive control. RESTEINER then used the investors principal for two main purposes: (1) first, to pay routine purported "interest" payments on the investments (approx. 4.5 % per month totaling nearly $18 million), thereby perpetrating the scheme, and (2) and to support his own undeniably lavish lifestyle which included maintaining a significant home in Lyford Cay, Nassau, Bahamas; a 176-room villa in St. Moritz, Switzerland, a domestic staff, a 110- foot yacht, an airplane, a helicopter, two Rolls Royce motor cars, two Hummer vehicles, a Porche Carrera sports car and other assorted vehicles.

RESTEINER's scheme was orchestrated from outside the United States, principally from his homes in the Bahamas and St. Moritz. The scheme was wildly successful, in part, because he fostered the victims' reliance on his integrity as an experienced business person and religious person, thereby abusing a private position of trust that he held vis-a-vis many of the victims. As indicated in the Indictment, RESTEINER was a journal-listed Christian Scientist practitioner. Many of his victims were members of the Church of Christ Scientist who were lured in by virtue of his position within the church.

Judge Gertner scheduled sentencing for May 8, 2006. RESTEINER faces up to 20 years' imprisonment, to be followed by three years of supervised release, and a $1,000,000 fine on each count of mail and wire fraud. As RESTEINER renounced his U.S. citizenship in 1995, he will be deported from the United States following any term of imprisonment. RESTEINER has been in custody since his arrest in Singapore in February 2004. He has been in custody in the United States since June 2004.

The case was investigated by the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorney Diane Freniere the Chief of Sullivan's White Collar Crime Section and Auditor Thomas Zappala of Sullivan's Economic Crimes Unit.

Source: prnewswire

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