Audrey Strauss, the United States Attorney for the Southern District of New York, announced that RULESS PIERRE was convicted today in Manhattan federal court of securities fraud, wire fraud and structuring costs. PIERRE was sentenced after a trial before Judge Sidney Stein.
US Prosecutor Audrey Strauss said: “Today, the Peter Rule was brought to justice for lying harshly to investors. Pierre told investors that their investment returns were excellent, when in fact he did not invest investor funds as promised, made losses when he invested and embezzled a large part of the funds. investors for his own personal use and to reimburse investors in the manner of Ponzi. We will continue to aggressively pursue frauds like this to protect investors. ”
According to the allegations contained in the complaint, the indictment and the evidence presented at trial:
Fraud of the promise of investment
From at least November 2016 to October 2019, PIERRE solicited money from investors at Ruless Pierre Consulting Group (“RPCG”) by falsely promising them that he would earn 20% return on their initial investment every 60 days through stock trading (hereinafter, “Promissory Note Fraud”). The investments were commemorated in documents called “investment promissory notes”. These investment contracts typically promised that the investor would receive 20% interest every 60 days and that the investor could withdraw all funds from the investment with 30 days notice. On the basis of these documents and PIERRE’s false declarations, the investors understood that their capital and their interests were guaranteed.
During the investment fraud scheme, PIERRE fraudulently obtained more than $ 2 million from nearly 100 investors. After receiving the money from the investors, PIERRE deposited the money into one of his personal bank accounts or RPCG bank accounts. PIERRE then transferred the money to trading accounts, where he engaged in unprofitable day trading. Despite his trading losses, PIERRE repeatedly and falsely represented to investors, including in investment statements containing fictitious balances, that trading was profitable and that their investments were progressing as promised. In addition to losing their money, PIERRE also used investor funds to pay for personal expenses, including luxury vehicles. In addition, PIERRE still withheld the truth from investors by using money obtained from new investors to make redemption payments to previous investors, Ponzi style.
Franchise investment fraud
From or around November 2018, PIERRE began offering investors, including some people who invested in his promissory note fraud, the ability to purchase stakes in a partnership that would operate three restaurant franchises. fast (hereafter, “franchise investment fraud”). At the time, PIERRE did not own any of the fast food franchises, but he was in discussions to purchase them. Each investment was commemorated in a document titled “Silent Partnership Agreement”.
The silent partnership agreements promised investors a 5% monthly return on the investment, in addition to a 40% pro-rated share of quarterly gross operating profit. The minimum investment was $ 5,000.
The silent partnership agreements further provided that RULESS PIERRE was the general partner and was responsible “for the management, control and comprehensive policies relating to the operation and conduct of the business”.
PIERRE received the financial statements of the franchised sites, which showed minimal profits. Nevertheless, PIERRE promised investors an unrealistic monthly return of 5% on their investment.
Around April 2019, PIERRE bought a fast food franchise for around $ 50,000. PIERRE did not buy the other franchises.
PIERRE deposited the investor money of the fast food franchise into various bank accounts, which mixed the funds from the investment franchise fraud with the promissory note fraud. Ponzi-like, PIERRE fraudulently embezzled some of the investors’ money in the fast food franchise to reimburse investors in the promissory note fraud.
In total, PIERRE raised at least $ 200,000 by selling the silent partnership agreements to at least 18 investors. Some of the investors received their 5% monthly distribution, but the vast majority of investors were not cured. The fast food franchise ceased operations in December 2019.
The system of fraud by embezzlement
In another ploy, PIERRE embezzled money from his former employers. From approximately 2007 to February 2016, PIERRE was CFO of two different hotels, which belonged to the same company (“Company-1”). One hotel was located in the Palisades, New York (“Hotel-1”), while the other was located in Armonk, New York (“Hotel-2”) (collectively, “the Hotels”). As financial director, PIERRE was a signatory to several bank accounts held in the name of the management companies which managed the hotels (“management companies”).
After August 2018, PIERRE no longer works at Hotel-1 or Hotel-2, but regularly issues checks payable in cash to the bank accounts of Management Companies. More specifically, from September 2018 to March 2019, PIERRE issued more than 70 “cash” or “petty cash” checks on one of Hotel-1’s bank accounts, for more than $ 300,000.
In addition, from March 2017 to 2019, PIERRE deposited large sums of money in his personal bank accounts for amounts generally less than $ 10,000. The deposits were made at various banking institutions and usually took place on the same day, consecutive days or within a short period of time. For example, in just seven months, from June 2018 to December 2018, PIERRE deposited approximately $ 225,612, through 138 cash deposits all under $ 10,000, into a bank account in the name of RPCG.
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PIERRE, 51, of Nanuet, New York, was convicted of two counts of securities fraud, each carrying a maximum sentence of 20 years in prison, one count of wire fraud, carrying a penalty maximum 20 years in prison, and one charge of structuring, carrying a maximum penalty of five years in prison. The potential maximum sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any conviction of the defendant will be determined by the judge.
PIERRE should be sentenced on September 9, 2021 at 2:30 p.m.
Ms. Strauss praised the investigative work of Homeland Security Investigations. Ms. Strauss also thanked the United States Postal Inspection Service, the United States Internal Revenue Service, the New York City Police Department and the New York City Sheriff’s Office, who contributed to the investigation. Ms Strauss also thanked the Securities and Exchange Commission, which brought and filed a civil action against the defendant.
This matter is being handled by the Bureau’s Securities and Commodities Fraud Working Group. US assistant lawyers Robert L. Boone and Drew Skinner are in charge of the prosecution.