Massive Ponzi Scheme Earns JailTerm
PHILADELPHIA - (10/24/05) -- A former investment advisor who soldphony CDs to hundreds of credit unions and banks was sentencedFriday to 55 months in jail and ordered to pay $24 million inrestitution in one of the biggest Ponzi schemes ever. RobertBentley, head of the now defunct Bentley Investment Services,pleaded guilty to fraud in a scheme that bought and sold more than$4 billion of CDs that Bentley portrayed as FDIC-insured but were,in fact, just paper IOUs he wrote out to his customers. More than100 credit unions bought into the scheme and have been left with asmuch $50 million in losses, including lost principal and interest.In a classic Ponzi scheme, credit unions managers and otherinvestors were paid off with funds from later sales to make it seemthe investments were legitimate. One credit union manager told TheCredit Union Journal he never suspected the fraud because hereceived timely interest and principal payments over more than fiveyears. Prosecutors said Bentley's scheme was due to fail because hepaid himself and his workers salaries that far exceeded the valueof his firm's income, including $78,000 used to illegally importCuban cigars, $20,000 for high-priced prostitutes, betting onsports, and other goods and services for a trip to LasVegas.