Why did 550 investors put $30 million in a Pasco-based Ponzi scheme named for a parasitic fly?

1

August

I'm back from a bit of summer R&R. If you have yet to take a break yourself, I highly recommend it...

charlesponzi-ap.jpgWake up and good morning. I knew it. Go away for a week or two and, of course, I'll come back to write about the legacy of marketing schemer extraordinaire Charles Ponzi (AP photo, left) yet again. Here in Florida. Another Ponzi scheme's popped out in Florida like sweat in a heat wave. Close news watchers already knew that David R. Lewalski was in big trouble for his Bayonet Point-based (that's on Clocktower Parkway in Pasco County, folks) investment scam known as Botfly was a fraud. Now Lewalski, formerly of Gainesville, Fla., has pleaded guilty to mail fraud in connection with his operation of a $30 million investment fraud scheme. So says Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Robert E. O’Neill of the Middle District of Florida. Here's the official Department of Justice news release

 Lewalski, 47, pleaded guilty before U.S. Magistrate Judge Mark A. Pizzo in the Middle District of Florida and faces a maximum penalty of 20 years in prison.

If you've been reading the news, Botfly's infamy is well known. The state stepped in in April to shut down Botfly, as this St. Petersburg Times story reports. I even ranked Botfly among my Top 5 "favorite" Ponzi schemes in Florida in this December 2010 column, in part because I marveled that anyone would invest their money in a scheme named for a fly that lays its parasitic eggs in mammals. Think that might be a tip-off to avoid this deal? Apparently not, to hundreds who gave their money willingly to Lewalski who, of course, was promising preposterous 10 percent per month returns from trading in the foreign exchange currency market.

Lewalski admitted that instead of trading in the foreign currency market as he promised, he used the bulk of victim investor funds to make payments to other investors in order to perpetuate the scheme and make it appear as if he was generating the promised returns. 

So, you 550 willing investors -- many of them from the Tampa Bay region and Florida -- what were you thinking? Lewalski used only a small percentage of those funds for forex trading (approximately $2.6 million), the vast majority of which he lost, the DOJ said.

Yeah, but along the way, Lewalski carved out quite a luxury lifestyle with investor money. And he had an accomplice from St. Petersburg named Jon J. Hammill with whom he shared his ill-gotten gains. A state lawsuit lists how this dynamic duo spent some of their investors' funds:

• $616,000 by Lewalski on "high-end automobiles."

• $155,000 by Lewalski on luxury hotels.

• $244,000 by Lewalski on retailers including Gucci, Cartier and Hermes of Paris.

• $475,000 by Lewalski on private jets.

• $45,000 on cosmetic and dental expenses.

• $345,000 in cash withdrawals by Lewalski.

• $1.18 million in payments from Lewalski to Hammill.

Forget the old saying about a sucker being born every minute. In Florida at least, investors ready to believe any promise of riches, no matter how absurd, are gushing by the second.

- Robert Trigaux, Business Columnist, St. Petersburg Times

 

[Last modified: Monday, August 1, 2011 8:49am]

Join the discussion: Click to view comments, add yours

Loading...