Defrauded funds fail to seize convicted advisor's $5.1M in accounts

A convicted investment advisor owes $364 million in restitution but pays just $100 a month - and a federal appeals court says that is enough. 

The Second Circuit on September 21 denied a petition from four defrauded entities seeking a court order to force the advisor to turn over the full value of his retirement, life insurance, and financial accounts to satisfy his restitution obligation. 

The advisor co-founded and ran a registered investment advisor in New York, serving as managing partner and chief operating officer from 2007 to 2019. According to his plea, he "conspired with others to defraud [International Investment Group]-managed funds by overvaluing loans, creating fake loans, transferring overvalued and fake loans between [International Investment Group] and advised funds, and using the proceeds from those fraudulent sales to generate what would be required to pay off earlier investors." The court called it a "Ponzi-like scheme." 

He pleaded guilty to conspiracy to commit wire fraud, securities fraud, and investment advisor fraud. In February 2023, a federal judge sentenced him to 13 months in prison, three years of supervised release, and $364,402,116.08 in restitution - owed jointly with a co-defendant. 

The sentencing order required a $40,000 lump sum before he reported to prison, then 10% of his monthly income during supervised release. He paid the lump sum but made only $100-a-month payments after his November 2023 release - technically in compliance, given his limited income. Meanwhile, his Vanguard IRA, two life insurance policies, and brokerage stock had grown from roughly $3.5 million at sentencing to about $5.1 million. 

The petitioners - two investment funds and two Curaçao-based banking entities, all victims of the fraud - joined the government in asking the district court to order full turnover. The district court ordered the advisor to liquidate only the appreciated value, roughly $1.5 million, and refused to hand over the rest. 

The Second Circuit agreed. Under the Mandatory Victims Restitution Act, when a restitution judgment does not make the full amount due immediately, contains a fixed payment schedule, and the defendant is in compliance, the government cannot force collection beyond those terms. 

The ruling does not leave victims without recourse. The district court has since raised the advisor's monthly payment to $600. The government settled a forfeiture claim for $600,000 over six years. A separate settlement directed 40% of proceeds from the sale of two properties toward restitution. 

For advisory professionals, the decision flags a gap: unless a sentencing order makes restitution due immediately, a convicted advisor can hold significant assets while making minimal payments - and victims may have few ways to accelerate recovery.