SACRAMENTO, Calif. (News India) – Kenneth Winton, 67, of Oroville, pleaded guilty today to conspiracy to commit wire fraud in relation to a $35 million Ponzi scheme, U.S. Attorney McGregor W. Scott announced.
The indictment in the related case, United States v. Piercey, 2:20-cr-211 TLN, charges Matthew Piercey, 44, of Palo Cedro, with wire fraud, mail fraud, money laundering, and witness tampering.
According to court documents, between July 2015 and August 2020, Piercey carried out an investment fraud scheme that raised a total of approximately $35 million in investor funds. Piercey used investment companies Family Wealth Legacy and Zolla to solicit funds from investors using a variety of false and misleading statements, including about trading algorithms, the success of the companies’ investment strategies, and the liquidity of investments. For example, Piercey solicited investor money for an “Upvesting Fund” that allegedly was an algorithmic trading fund with a history of success, but he admitted privately to an associate that there was no Upvesting Fund.
Piercey first recruited Winton as an investor, then to assist with raising investor funds, and ultimately to take on management responsibilities at Zolla. From 2018 to 2020, Winton conspired with Piercey and made various false and misleading statements to investors, including about the success of Zolla’s investment strategies, the reasons for delays in payment to investors, and the current location, value, and nature of Zolla investments. The part of the scheme attributable to Winton caused investors to make investments or forego their right to withdraw investments totaling approximately $11.6 million.
Piercey and Winton used some investor money to make payments to other investors in a “Ponzi scheme.” In total, they paid back approximately $8.8 million to investors. They used other investor money for various business and personal expenses, including two residential properties and a houseboat. Few, if any, liquid assets remain to repay investors.
According to court documents, Piercey also tampered with multiple witnesses by discouraging them from responding to grand jury subpoenas related to the investigation.
Winton is out of custody pending his sentencing. Piercey is currently in custody. When law enforcement agents attempted to arrest Piercey, he fled from arrest by leading agents on a vehicle chase through residential neighborhoods and then onto the highway before abandoning his vehicle and entering Lake Shasta with an underwater submersible device.
This case is the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Christopher S. Hales and Miriam R. Hinman are prosecuting the case.
Winton is scheduled to be sentenced by U.S. District Judge Troy L. Nunley on Feb. 18, 2021. Winton faces a maximum statutory penalty of 20 years in prison and a fine of up to $250,000 or twice the gross gain or loss, whichever is greater. If convicted, Piercey faces a maximum statutory penalty of 20 years in prison and a fine of up to $250,000 or twice the gross gain or loss, whichever is greater, for each wire fraud and mail fraud count; 20 years in prison and a fine of up to $250,000 for each witness tampering count; and 20 years in prison and a fine of up to $500,000 or twice the value of the property involved, whichever is greater, for each money laundering count. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges against Piercey are only allegations; he is presumed innocent until and unless proven guilty beyond a reasonable doubt.