George Sepero of Glen Rock, NJ, has pleaded guilty to multiple charges of fraud in connection with a $3.5 million Ponzi scheme. The 40-year-old Sepero ran a web of phony hedge funds and foreign currency trading accounts in collusion with fellow New Jersey residents Carmelo Provenzano, 29, and Daniel Dragan, 41. Both Provenzano and Dragan agreed to make a guilty plea to wire fraud conspiracy in the case last year.
From 2009 to 2011 Sepero and friends posed as hedge fund managers operating highly profitable investment vehicles in foreign currency exchange. Under companies with names like Caxton Capital Management, SP Investors and CCP Pro Consulting Inc., they touted a special trading algorithm that generated gonzo annual yields of 175%. The program was the handiwork of one “Mel Tannenbaum,” in reality just Provenzano playing forex whiz-kid. Screenshots of Mel’s brainchild in action on the markets were even sent out to investors to convince them of successful trading.Not surprisingly, just as Tannenbaum never existed, neither did the proprietary algorithm. Very little of client funds was actually traded; most of it seems to have been squandered by Sepero and his associates on all sorts of vanities. Among the most extravagant expenditures we find:
- $18,241 run up in bar tabs, including a rather generous tip of $4,000, at the Los Angeles nightclub Drai’s of Hollywood. (Owner Victor Drai is famous for producing the 80s movie masterpiece Weekend at Bernie’s.)
- $80,000 for Sepero’s Ford F-350 “Harley Davidson Edition” truck.
- $37,000 for Sepero’s Mini Cooper.
- $71,000 for Provenzano’s Range Rover Sport SUV.
In addition to these items, the men flushed away other people’s cash on luxurious $4,000-a-night W Hotel accommodations, first-class travel by jet and limousine, mortgages, jewelry and fancy restaurants. Upon his indictment in 2011, Sepero proclaimed that “money spent was specifically for business.”
According to his indictment, so eager was Sepero to make business expenditures that he defrauded an elderly paraplegic woman suffering from dementia and multiple sclerosis, impersonating her relatives to raid her annuity fund of $750,000. By the end of his run, $16.57 was left in the account.
- Age: 40
- Company: Caxton Capital Management, SP Investors, CCP Pro Consulting
- Job: Hedge Fund Manager
- Alleged Scam: Hedge Fund, Forex
- Profits: 175% per year
- Ponzi Time: 2009-2012
- Amount of Fraud: $3.5 million
- Number of victims: Unknown
- Location: New Jersey
- Indictment: 17 Counts of Conspiracy, Wire Fraud, Mail Fraud
- Court: U.S. District Court, District of New Jersey