(WFRV) – A man from the Chicagoland area was sentenced to 48 months in prison after being convicted of an investment fraud scheme that caused over 100 Illinois and Wisconsin investors to lose more than $1.6 million.
Richard Frohling, the Acting U.S. Attorney for the Eastern District of Wisconsin, announced Wednesday that 55-year-old Ronald Pallek of McHenry, Illinois, had engaged in the scheme for several years.
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Court records show that Pallek’s scheme consisted of him convincing friends, mutual friends, and family members to invest money with him, promising that he could double their investment. Pallek claimed that he would use an ‘iron condor’ despite knowing that he had never been able to generate the profits he spoke of.
Even though he had lost victims’ money or spent it for his own gain, Pallek continued soliciting others while promising to pay off those he had previously defrauded. Additionally, Pallek repeatedly sent fake earnings statements to victims.
In those lies, he had made ‘Ponzi-style’ payments to the initial victims with new funds from the second group of individuals. Investigations revealed that he used the money to pay for his expenses, including his mortgage and car payments, as well as for gambling.
United States District Judge Brett Ludwig noted at sentencing that Pallek’s criminal enterprise was cultivated through the manipulation of trust and repeated acts of deceit and false conduct.
“Mr. Pallek abused the trust of his victims, targeting hard-working individuals and small business owners,” Acting U.S. Attorney Frohling said via the release.
FBI Milwaukee Special Agent in Charge Michael Hensle also worked on the case, stating that he and his colleagues will relentlessly pursue investigations against people who commit acts of financial fraud.
“We continue to work alongside our law enforcement partners to ensure that justice is served,” Special Agent in Charge Hensle said via the release.
The Chicago Field Office of the IRS-Criminal Investigation also took part in the case, citing the manipulation of trust that such crimes create.
“The cruelty of this scheme wasn’t just in the dollars stolen—it was in the betrayal,” Jason Bushey, Acting Special Agent in Charge, said. “This defendant exploited the trust of those closest to him, using friends and family like an ATM to fund his lifestyle.”
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Pallek also must pay restitution of $1,679,250 as a result of the sentence.
No additional details were provided.
