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DANBURY, Conn. A 63-year-old New Fairfield man who ran an investment firm on Deer Hill Avenue in Danbury pleaded guilty this week to running a Ponzi scheme that swindled several clients out of more than $500,000.
Stephen B. Blankenship, of 23 Ridge Road in New Fairfield, pleaded guilty Wednesday to one federal charge of mail fraud and one federal charge of securities fraud before U.S. District Court Judge Vanessa Bryant in Hartford. He is scheduled to be sentenced Dec. 5, and he faces a maximum of up to 40 years in prison, or up to 20 years for each count.
Blankenship and his firm, Deer Hill Financial Group, LLC, also faces a separate complaint from the Securities and Exchange Commission of violating anti-fraud provisions and acting as unregistered brokers.
Over the course of several years, this defendant deceived investors into entrusting him with their funds, and then into believing their funds were safe and their investment accounts were appreciating, U.S. Attorney David Fein said in a statement. All along, he was using those funds to pay business and personal expenses and to pay other investors as part of a Ponzi scheme.
For the 10-year period of 2002-12, Blankenship falsely represented to numerous individuals that he had investment opportunities that were safe and would pay a consistent return to investors, according to Fein. Blankenship, who had been affiliated with registered broker-dealers in California and New York, defrauded at least eight investors, many of who were prior clients.
Fein said Blankenship sent investors fake account statements reflecting fictitious holdings, fictitious transactions, fictitious prices for the securities and phony balances, all in an effort to appear legitimate.
Members of the FBI, SEC, Connecticuts Department of Banking and Danbury Police Department all were involved in the investigation, Fein said.
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