Naugatuck Resident Pleads Guilty In Investment Fraud Scheme Case: Feds

NAUGATUCK, CT — A Naugatuck resident pleaded guilty Tuesday to an offense stemming from an investment fraud scheme, U.S. Attorney for Connecticut Vanessa Roberts Avery announced in a news release.

According to court documents and statements made in court, in 2017 and 2018, Rafael Muzzi induced investors to provide him funds, at times using two entities he formed, Solace Investments LLC and Asseno LLC, based on the representation he would use the funds for trading currencies in foreign exchange markets using a trading software program that he told his victims he had developed.

Muzzi, a 27-year-old citizen of Brazil residing in Naugatuck, represented to victims that his software program had a feature that would cause trading to cease in the event of a certain loss in value, thus minimizing downside risk, Avery said.

According to Avery, Muzzi failed to invest a substantial portion of invested funds as he represented and instead diverted those funds for his own personal use, and to pay other individuals who had invested with him.

Through this scheme, Muzzi defrauded at least 10 victim-investors out of what the government determined totaled more than $550,000, according to Avery.

Muzzi sent victims fabricated monthly account statements that falsely overstated their return on investment and their account balances. These misrepresentations induced some victim-investors to provide him with additional investment funds, Avery said.

Muzzi also provided victims with purported tax documents reflecting fictitious investment profits, causing victims to report and pay taxes on profits that they had not realized, according to Avery.

In response to complaints, the state Department of Banking investigated Muzzi's conduct, issued orders finding that Muzzi and Solace Investments had violated state securities laws, ordered them to make restitution to victims and fined Muzzi $300,000, according to Avery.

Muzzi traveled to Brazil on Sept. 6, 2020, and did not return. On Aug. 23, 2022, a federal grand jury in New Haven returned an indictment charging Muzzi with fraud and money laundering offenses, Avery said.

Muzzi was arrested April 1, 2023, in Panama and waived his right to contest his extradition to the U.S., according to Avery.

Muzzi pleaded guilty Tuesday to wire fraud, an offense that carries a maximum prison term of 20 years. Sentencing is scheduled for Oct. 22.

Muzzi is released on a $150,000 bond pending sentencing, Avery said.

The investigation was conducted by the Federal Bureau of Investigation with assistance from the Connecticut Department of Banking, Securities Division.

Avery also thanked Interpol and Panamanian authorities for their assistance in apprehending Muzzi, as well as the U.S. Department of Justice's Office of International Affairs for coordinating the extradition proceedings in this matter.