Investment Advisor Pleads Guilty In Multi-Million Dollar Scheme

An East Setauket man today pleaded guilty to conspiracy to commit mail and wire fraud for orchestrating a Ponzi scheme over the last 18 years, federal officials said.

According to United States Attorney the Eastern District of New York's office, Steve Pagartanis organized a scheme to scam elderly investors.

“Pagartanis perpetrated his fraud scheme against elderly investors who could least afford to lose their life savings,” stated United States Attorney Donoghue. “Protecting older Americans from financial predators like the defendant is a priority of the Department of Justice.”

From January 2000 to March 2018, Pagartanis, a formerly licensed financial advisor and affiliate of a registered broker-dealer, solicited elderly victims to invest in real estate-related investments, including those affiliated with publicly traded entities, a Canadian company and an international hotel conglomerate.

Federal officials said Pagartanis promised the victims their principal would be secure and earn a fixed return, which he typically claimed to be between 4.5 to 8 percent annually. At Pagartanis’s direction, the victims wrote checks payable to an entity secretly controlled by Pagartanis. Pagartanis utilized a network of bank accounts to launder the stolen funds, which he used to pay personal expenses, buy luxury items and make the guaranteed “interest” or “dividend” payments to other victims. Pagartanis created fictitious account statements reflecting ownership interests in the purported investments to induce investment and conceal the scheme. In all, the victims invested over $13 million and sustained actual losses of over $9 million.

Many victims lost substantial portions of their life savings as a result of the scheme.

When sentenced, Pagartanis faces up to 20 years’ imprisonment.

The SEC has filed a civil case against Pagartanis, which was stayed pending resolution of the criminal case.

The government’s criminal case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorney Artie McConnell is in charge of the prosecution.

Photo: SCDA