A New York district court has entered a final judgment against Steven Pagartanis, a barred broker who was sentenced to 170 months in prison last year for defrauding 17 brokerage customers out of $13 million between January 2000 and March 2018.
Pagartanis began his brokerage career 1989 and was affiliated with multiple firms including Lombard Securities, Cadaret, Grant & Co., Woodbury Financial, Invest Financial, Yankee Financial, and Park Avenue Securities.
According to the SEC’s complaint, Pagartanis told investors, some of whom had been his clients for many years, that he would invest their funds in either a publicly-traded or private land development company and guaranteed monthly interest payments of between 4.5 and 8 percent.
One such company, Genesis Land Development Co., is a Canadian land development and home building company listed on the Toronto Stock Exchange. Pagartanis would then have his clients write checks to a similarly named entity, Genesis I, which he controlled, the SEC said.
He reportedly misappropriated the proceeds to pay personal expenses and make payments to his investors in a Ponzi scheme-like manner. To conceal the fraud, which unraveled in early 2018 when he stopped making the “interest payments” to customers, he created fictitious account statements reflecting ownership interests in the land development companies.
Pagartanis consented to the final judgment, which permanently enjoins him from violating the antifraud provisions of various federal securities laws, and also orders him to pay $6.5 million in disgorgement, which is deemed satisfied by a restitution order in a parallel criminal action.
In the parallel criminal action, Pagartanis pled guilty to one count of conspiracy to commit mail and wire fraud. He was sentenced to a prison term of 170 months followed by three years of supervised release and ordered to pay roughly $6.5 million in restitution.
He was barred by the SEC in February and is currently incarcerated at FCI Danbury, a low security federal correctional institution in Connecticut.