Hackensack Day Trader Sentenced to Three Years for Scams, Tax Evasion

A Hackensack day trader was sentenced Monday to three years in federal prison on charges he dodged taxes and carried out two scams that netted about $2 million, using thousands in ill-gotten funds for expenses including hair salon visits and skin treatments, prosecutors said.

Victor E. Cilli, 46, also must pay $710,000 in restitution and more than $410,000 in penalties, interest and taxes. Cilli had already pleaded guilty to charges including securities fraud, conspiracy to commit bank fraud and tax evasion.

Beginning in 2007, Cilli and his firm, Hackensack-based Progressive Investment Funds LLC, ran a commodity pool Ponzi scheme that scammed at least four investors out of about $506,000, according to a case summary published by the National Futures Association, an industry watchdog.

Cilli made false statements to pool participants claiming he was making money while most of his trades ended in losses. Along with salon visits, Cilli used thousands in pool funds for expenses including payments on his Harley Davidson motorcycle.

In a separate scam, Cilli and 16 others conspired to defraud Ohio-based KeyBank out of more than $1.5 million in student loans between 2002 and 2006. Prosecutors said the group falsely claimed they would use the loans to attend Florida-based pilot and flight crew school Tab Express International Inc.

The crew never planned to attend the school or make payments on the loans, prosecutors said. About $600,000 in loans was deposited in bank accounts controlled by Cilli, who kicked back around $130,000 to his co-conspirators.

In 2003 and 2004, Cilli failed to report the gains from his bank fraud, leading to about $158,674 in tax losses.