A Florida man was sentenced Thursday to five years in federal prison for his role in an overseas loan scam that cost 47 investors on four continents more than $3.9 million.
The criminal case against Fotios Geivelis Jr., 34, of Fort Myers, was prosecuted in Pittsburgh because one of his victims was in western Pennsylvania. But Assistant U.S. Attorney Leo Dillon told the sentencing judge the case involved "an enormous worldwide fraud," with victims in the United States, Germany, Switzerland, Hong Kong, Japan and Australia.
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The federal indictment in Pittsburgh grew out of a Securities and Exchange Commission investigation of Geivelis and a 70-year-old Miami attorney, Bernard Butts. Geivelis lived in New Jersey and Florida while running the scam through a Florida-based business called Worldwide Funding III Ltd., from April 2012 through September.
Dillon told U.S. District Judge Nora Barry Fischer that Geivelis solicited potential borrower-investors through Internet ads promising a quick return on investments of $60,000 to $90,000. Clients were told that fee would enable Geivelis to secure overseas loans of up to 10 million euros, or about $13.4 million.
But instead of investing the money, Geivelis and Butts split about 90 percent of it — 10 percent went to some Florida brokers who acted as middlemen — with Geivelis spending his share on cocaine, casinos, strip clubs, luxury automobiles and other lavish expenses, Dillon said. The investors were kept in the dark with false documents and promises that their money was safe and the transactions carefully regulated.
The investors weren't named or described in court documents, though Dillon said one man was from Perth, Australia, and lost $60,000 trying to finance a community education center for local youth.
Geivelis advertised the business as a way to finance humanitarian causes or community development projects. Investigators never determined whether the individual victims legitimately sought the loans for those purposes, or whether they were cheated while trying to take advantage of an easily-seen-through offer of money they would probably not have to pay back.
Defense attorney R. Damien Schorr argued that most of the investors were financially savvy and were attracted because they knew the loans were structured in such a way that they had little to lose.
"These were people who thought they could get away with $10 million without having to pay it back," Schorr told the judge. "There's an old saying, 'You can't cheat an honest man.'"
Fischer told Geivelis she wasn't sure what to think, saying, "Maybe it was too good to be true. Maybe they thought the state of Florida, where you were operating, was the land of riches."
Whatever the case, "This was a doozy," Fisher said.
The victims are being paid back entirely because the SEC and the Secret Service have each seized more than $2 million from Butts to settle the SEC litigation. Butts wasn't charged criminally because Dillon said email evidence didn't prove Butts knew how the scam worked. Geivelis had pleaded guilty to wire fraud in March.
"Mr. Geivelis was telling the same lies to Mr. Butts as he was telling to the investors," Dillon told the judge.