SARASOTA -- A Sarasota investor accused of bilking millions of dollars from clients in an alleged Ponzi scheme has been charged with fraud.
Wednesday the Securities and Exchange Commission charged Gaeton "Guy" S. Della Penna, 61, with defrauding investors in the scheme. The agency filed its complaint with the U.S. District Court Middle District of Florida. At the same time, the U.S. Attorney's office in Tampa announced criminal charges against Della Penna. A grand jury indicted Della Penna on eight counts of wire fraud and 10 counts of mail fraud in connection with the indictment.
Della Penna turned himself in to authorities Wednesday, according to the Attorney's Office. He was released on a $25,000 signature bond and was required to surrender his passport after appearing before a U.S. magistrate judge Wednesday afternoon. No date for a criminal trial has been set.
The charges are the result of an investigation conducted by the SEC with the assistance of the U.S. Attorney's Office. Also involved in the investigation were the U.S. Secret Service and the Sarasota County Sheriff's Office.
According to the SEC complaint, Della Penna raised $3.8 million from investors, many of whom were acquaintances he met through his church. Those funds went into three private investment funds he operated. The SEC alleges that $1.1 million of the total went to his own use, while $1.4 million was
paid back to early investors in the scheme. Della Penna lost much of the rest on unsuccessful investments.
In all, the SEC accuses Della Penna of violating seven sections and rules that govern the U.S. securities and investments market. The agency will seek to bar Della Penna from ever working in the securities market again. It will also pursue any "ill -gotten gains" and will level financial penalties against him, according to a release published by the SEC.
Eric Bustillo, director of the SEC's Miami Regional Office, said the SEC will seek either a civil settlement or will take Della Penna to court. The strength of the case will likely determine which route the agency takes.
"Statistically, we settle a lot more cases than we try," he said.
As the fraud began to unravel, Della Penna used money from newer investors to pay fake returns to prior investors. The SEC also alleges that he gave false financial statements to investors to mislead them into believing they were earning a return.
The three investment funds named in the SEC complaint are A-G Hedge Group LLC, The Contrarian Fund LLC and The New Economy Fund LLC. Public records show that the latter two funds operate out of a manufactured home in North Port. A-G Hedge Group, which the state lists as an inactive business, was registered to a single family home in the same city.
Investors, including individuals, investor groups, an engaged couple and a family and its family trust bought into the investment funds between 2008 and 2013 after being promised 5- and 10-percent returns with an 18-month maturity, according to the SEC. The complaint said Della Penna sold notes in his investment funds. Later in the scheme, he told investors that he was investing their money in small companies.
Della Penna siphoned money away from investor funds to make mortgage payments on a Siesta Key home he lived in with a girlfriend and to make payments to that girlfriend. He also transferred investor funds into investment accounts with another business venture, Gaeton Capital Advisors LLC, the complaint states.
Sarasota County records show that Della Penna and Sharon Nizolek took out several mortgages in 2003 and 2004 on a 9,375-square-foot home at 6629 Peacock Road on Siesta Key. The county lists Nizolek as the owner. The property was listed for sale in 2012 for $9.5 million.
The SEC's Bustillo said his agency will "pursue any and all assets we have the ability to reach" to pay back Della Penna's investors.
Della Penna has operated several other businesses in Florida in past years, including FAS Wealth Management Services.
In 2005, a Brevard County court ordered Della Penna and his business to pay $125,000 to a disabled former client who claimed to have lost nearly $300,000 on stock investments with the company.
Matt M. Johnson, Herald business reporter, can be reached at 941-745-7027, or on Twitter @MattAtBradenton.