Andrew Mackey, a recently convicted ponzi scheme operator who defrauded 160 metro-Atlantans through his company, ASM Financial Funding Corp., was sentenced to 27 years in federal prison by U.S. District Court Judge William Duffey. His common law wife, Inger Jensen, had already been sentenced to 14 years for her role in the fraud (“Man gets 27 years for $12 million Ponzi scheme,” by Bill Rankin, Atlanta Journal Constitution).
The sentence is reportedly the longest ever issued by a federal court in Atlanta for investment fraud. Investors, who were promised 10% to 20% annual returns, lost a combined $12 million. Many were retirees who lost their entire life savings. Mackey, age 62, will be 89 if he lives long enough to serve out his sentence. There is no parole in the federal prison system.
A ponzi scheme is essentially a form of fraud in which the perpetrator falsely tells investors that their money will be invested so as to earn a high rate of return. The fraudster actually pays earlier investors’ money back to them to create the appearance that the promised stellar investment returns are being delivered. The appearance of success sets the stage to entice new investors. Funds that are not recycled to investors as returns are usually spent by the perpetrator on unrelated businesses and personal expenses. Ultimately, the house of cards collapses when the supply of new investors dries up.
In this case, one of Mackey’s more prominent early investors was a pastor who invested a total of $200,000. Mackey made sure that the pastor received a handsome “return,” after which the pastor spread the “good news” to some of his friends.
In the Madoff ponzi scheme, the bankruptcy trustee was able to claw back a substantial amount of the payments made by Madoff to some early investors on the ground that they knew or should have known of the fraud. It is not clear whether or not that may the case here. If not, the victims, most of whom were not wealthy when they invested with Mackey, are unlikely to recover any of their money.
Page Perry, LLC is an Atlanta-based law firm with over 170 years of collective experience maintaining integrity in the investment markets and protecting investor rights.