California man gets 10 years for Texas Ponzi scheme

Posted Friday, May. 03, 2013  comments  Print Reprints

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More than two dozen investors were likely defrauded in a Ponzi scheme operated by a California man, who was sentenced to 10 years in prison Friday in federal district court.

Jeffrey J. Sykes of San Bernardino County, Calif., was also ordered to pay almost $17 million in restitution by U.S. District Judge John McBryde, court records showed. Sykes pleaded guilty earlier this year to two counts of securities fraud.

Sykes, 54, ran a fictitious U.S. Treasury Bill trading program that defrauded numerous individuals, including about 37 investors solicited by a Westlake man, referred to only as “M.K.” in court documents. The suit was filed in U.S. District Court in Fort Worth.

Jeff Ansley, a Dallas attorney representing Sykes, was unavailable for comment Friday afternoon.

Court documents showed that Sykes had operated a private equity company, Gemstar Capital Group. In or around 2006, he met “M.K.” on a golf course, and the two men made an agreement to gather up investors to participate in a U.S. Treasury Bill program. “M.K,” the lawsuit states, solicited about 37 investors who ponied up $24.6 million for the T-Bill trading program.

But the T-Bill trading program never existed, and none of the money was invested, court records show. Sykes created false quarterly account statements and misrepresented quarterly profits and account balances to investors, it was alleged.

“Instead, Sykes and M.K. used some of the money for personal expenses,” the lawsuit states. “Some of the money was invested in ventures that investors were unaware of and had not consented to participate in.”

It was unclear in court documents whether “M.K” had been formally charged with wrongdoing or whether he was aware of the scheme.

U.S. Attorney Jay Stevenson Weimer did not return phone calls Friday. The suit was filed December 2012.

Yamil Berard, 817-390-7705

Twitter: @yberard

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