Wallingford Man Admits Operating Ponzi Scheme

Wallingford Man Admits Operating Ponzi Scheme

Joseph A. Castellano, 49, of Wallingford, pleaded guilty on Friday in Hartford federal court to fraud and money laundering offenses stemming from an investment scheme that defrauded individuals of nearly $1.5 million.

According to the court documents and statements made in court, Castellano operated various entities out of offices in Wallingford, including Casbo investment, Wallingford Investors Limited Partnership, AIM Realty Investors, and Castellano & Co., LLC. As a Certified Public Accountant and owner of Castellano & Co., LLC, Castellano prepared federal and state tax returns for individuals and local businesses. In connection with his tax preparation businesses, Castellano established a base of clients to which he offered financial services and investment opportunities in addition to preparing their taxes.

Beginning in approximately July 2007, Castellano falsely represented to victim-investors that he had clients who were in need of capital to fund businesses or real estate development projects, but were unable to secure funding from traditional sources such as financial institutions. Castellano told victim-investors that he would obtain for them a consistent rate of return of between approximately six percent and eight percent annually on their money by taking their money and placing it will, or loaning it to, one or more of his other clients. Castellano, through Casbo investments, prepared and executed official-looking documents and investment contracts termed “Demand Notes,” which contained a promise to return the principal amount, with interest, at any time.

In fact, there were no actual investments or invest opportunities, and the money was not invested with or loaned to other clients of Castellano. Castellano diverted the funds for his own use and benefit, including making “interest” payments to other victim-investors. Castellano also made false statements to certain victim-investors to explain various delays in the purported interest payments.
Through this scheme, Castellano defrauded more than 10 victim-investors of approximately $1.45 million.

Castellano was arrested on April 6, 2016.