Federal agents have arrested unregistered investment adviser, Matthew Piercey, creator of investment companies Family Wealth Legacy and Zolla, who was charged with running a $35 million fraud scheme.
Piercey was arrested following a grand jury indictment on November 12th, charging him with wire fraud, mail fraud, money laundering, and witness tampering.
When law enforcement attempted to arrest Piercey this week, he led agents on a car chase through residential neighborhoods, and then onto the highway, before abandoning his vehicle and entering Lake Shasta with an underwater submersible device. Law enforcement officers arrested him after he emerged from the lake.
In addition, his associate Kenneth Winton of Oroville, California was charged separately with conspiracy to commit wire fraud.
According to court documents, from about July 2015 through August 2020, Piercey carried out an investment fraud scheme that raised a total of approximately $35 million in investor funds.
Piercey alledgely used Family Wealth Legacy and Zolla to solicit funds from investors using a variety of false and misleading statements relating to trading algorithms, the success of the companies’ investment strategies, and the liquidity of investments.
For example, Piercey solicited investor money for an “upvesting fund” that was marketed as an algorithmic trading fund with a history of success, but he admitted privately to an associate that there was no fund.
Piercey first recruited Winton as an investor, then to assist with raising investor funds, and ultimately to take on management responsibilities at Zolla. From 2018 to 2020, Winton allegedly conspired with Piercey and made various false and misleading statements to investors relating to the success of Zolla’s investment strategies, the reasons for delays in payment to investors, and the current location, value, and nature of Zolla investments.
Piercey and Winton used some investor money to make $8.8 million in payments to other investors in a Ponzi-like scheme. The other funds were used for various business and personal expenses, including two residential properties and a houseboat. Few, if any, liquid assets remain to repay investors, the feds claim.
According to court documents, Piercey also tampered with multiple witnesses by discouraging their response to grand jury subpoenas related to the investigation.
If convicted, Piercey faces a maximum statutory penalty of 20 years in prison and a fine of up to $250,000 or twice the gross gain or loss, whichever is greater, for each wire fraud and mail fraud count; 20 years in prison and a fine of up to $250,000 for each witness tampering count; and 20 years in prison and a fine of up to $500,000 or twice the value of the property involved, whichever is greater, for each money laundering count.
If convicted, Winton faces a maximum statutory penalty of 20 years in prison and a fine of up to $250,000 or twice the gross gain or loss, whichever is greater.
The defendants are presumed innocent until and unless proven guilty.