Volume 3 Number 23
June 5, 2006

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GALLAGHER ANNOUNCES TWO SOUTH FLORIDA AGENTS GET 25-YEAR SENTENCES IN PONZI SCHEME

Tom Gallagher, Florida’s chief financial officer, announced that two former south Florida agents have been sentenced to 25 years in prison for their roles in a Ponzi scheme that bilked more than 30 investors out of $1.2 million.

Thomas A. Masciarelli, 49, and Steven Petrarca, 55, were convicted of aggravated white collar crime and fraudulent investment transactions following an investigation by the Department of Financial Services, Division of Insurance Fraud, and the Office of Financial Regulation.

“What these individuals did was egregious, and their sentences reflect that,” said Gallagher, who oversees the department. “We will not put up with Florida’s investors - particularly our vulnerable elderly investors - being preyed upon.”

The department’s Division of Agent and Agency Services first began investigating Masciarelli and Petrarca for suspected failure to return unearned commissions, but the investigation soon led to suspicions that the two were engaged in selling unregistered securities and the Division of Insurance Fraud was brought in to assist. The probe revealed the two convinced clients to liquidate annuity investments and invest in a bogus company that would buy and sell distressed real estate, and promised returns of up to nine percent. No real estate was purchased, and investors received phony statements.

The scheme snared victims in St. Petersburg, Riviera Beach, Gulfport, Greenacres, Lighthouse Point, Silver Springs, Boca Raton, Jupiter, Sarasota, North Palm Beach, Lake Worth, Gainesville and West Palm Beach.

Detectives arrested Masciarelli a second time in 2005 and charged him with stealing $300,000 from three investors – a 58-year-old woman supporting a disabled adult daughter, an 82-year-old woman with no family, and an 80-year-old man suffering from Parkinson’s disease. All three cases were nearly identical: Masciarelli sold them fixed annuities from American Investors Life Insurance Company (AILIC) and then later advised them to cash out the AILIC annuities and buy investments purportedly offered through his own company, Palm Beach Financial Services, Inc. However, detectives said Masciarelli did not invest the funds but instead used the money for personal and other expenses.

The Department of Financial Services, Division of Insurance Fraud, investigates various forms of fraud in insurance, including health, life, auto, property and workers' compensation insurance. To report fraud, visit www.MyFloridaCFO.com or call the department’s Fraud Fighters Hotline at 1-800-378-0445. A reward of up to $25,000 may be offered for information leading to an arrest and conviction.