Man Gets 15 Years In Local Ponzi Scheme

A Broomall, Pa. man has been sentenced to 15 years in prison for wire, mail and bank fraud and money laundering in connection with a 12-year, multi-million dollar Ponzi scheme.

Between 1996 and 2008, Joseph S. Forte, 54, collected investment money from 91 individuals and entities using a fraud scheme in which Forte claimed that he was profitably trading in S&P 500 stock index futures contracts through a partnership named Joseph Forte LP, says United States Attorney Michael L. Levy. Forte admitted to diverting millions of dollars of investor funds to pay some investors "returns" on their investments by using money contributed by other investors.

Forte claimed that his trades were profitable, reporting fabricated investment returns between 18% and 38%, when in fact, Forte consistently lost money on his trades. Despite the partnership's actual losses, Forte was able to continue raising money from new investors by falsely reporting high return rates.

Forte used a two-step process for misleading his investors, says the U.S. Attorney. On a quarterly basis, he sent to an accountant e-mail messages containing false representations about his trading activity, the status of the investors' investments, and the worth of the partnership. At Forte's instructions, the accountant then sent the investors quarterly investment statements that were created based on Forte's misrepresentations.

The information further alleges that Forte paid himself millions of dollars in salaries and fees and used his profits to make numerous financial transactions and induced Commerce Bank to loan him nearly $500,000 by misrepresenting the value of Joseph Forte LP, according to Levy.

In addition to the prison term, U.S. District Court Judge Jan DuBois ordered Forte to pay restitution in the amount of $34,865,554, and serve five years of supervised release. Judge DuBois also ordered an additional money judgement in the amount of $34,865,554.

Forte is expected to begin serving his sentence by January in a federal prison somewhere in the region. The judge granted that defense request so Forte's family could more easily visit him.

The case was investigated by the U.S. Postal Inspection Service, the FBI, the Delaware County District Attorney's Office, the SEC, and the CFTC.