Crystal Lake Man Convicted In Federal Court In $8M Ponzi Scheme

NEW YORK, NEW YORK — A Crystal Lake man has been convicted in federal court of defrauding investors out of more than $8 million as part of a Ponzi scheme, federal prosecutors said this past week.

Alan John Hanke, the sole member of IOLO Capital (IOLO), pleaded guilty to conspiracy to commit securities fraud for his role in misappropriating the funds and also admitted to filing for bankruptcy to conceal the conspiracy, according to a news release from the U.S. District Attorney's Office.

According to an indictment, between November 2018 and August 2021, Hanke persuaded numerous investors, often in meetings in New York City, to invest in IOLO or related Hanke-run companies, according to the news release.

Hanke promised investors high returns within short periods of time by investing in, among other things, “standby letters of credit,” “medium term notes” and “high yield bonds."

Hanke also assured investors their investments would be insured against losses, according to a news release. However, nearly all the money that the victims invested with Hanke was not recovered.

The bulk of the victims’ money went to Hanke’s personal expenses, including cruises, airfare, hotels, gambling expenses and a luxury car, authorities said. Hanke also paid co-conspirators and other investors with money that he wrongfully obtained during the scheme.

Hanke filed a bankruptcy petition in June 2021 in which he sought to discharge the debts that he owed to his victims.

In the bankruptcy petition, Hanke disclosed that he received monthly Social Security disability payments but did not disclose the millions of dollars of income he received from his victims. Hanke also did not disclose the proceeds from the sale of an airplane, or that he used the proceeds for personal expenses, including gambling and repairs to a close relative’s home, as well as $180,000 that was withdrawn in cash, according to the news release.