Louis Gallo, former vice president of Commodities Online LLC, a Florida-based investment company, was sentenced last week to fourteen years imprisonment and ordered to pay nearly $20 million in restitution for his participation in a $21 million invest fraud. Gallo’s sentence will additionally include three years of supervised release after he is released from prison. Finally, he will have to forfeit a criminal money judgment of $21.6 million as well as his interest in a car, two bank accounts, and three properties.
Gallo pleaded guilty in August to one count of conspiracy to commit mail and wire fraud. From January 2010 to April 2011, Gallo allegedly conned over 700 investors out of $21 million. James C. Howard III, Commodities Online’s co-founder, had already pleaded guilty to his role in the scheme and was sentenced to fifteen years and nine months and forced to pay $18.9 million in restitution. Rita E. Balbirer received twenty-one months on a money laundering charge.
Patricia S. Saa, Commodities Online’s other co-founder, still has charges pending against her. Michael R. Casey, Commodities Online’s outside legal counsel, also has charges pending against him. The Florida Supreme Court suspended his license in May after he did not show up for a hearing regarding this case.
Gallo and his co-schemers allegedly sold Commodities Online ownership units, subscriptions to Commodities Online’s website and investments in transactions to purchase and sell items such as seafood, iron ore, copper, and sugar. In addition, the group solicited “pre-sold” commodities contracts through Commodities Online’s website.
The group represented to investors that the company was profitable. However, the payments made to the first investors came from the funds of subsequent investors, the defining element of what is commonly called a Ponzi scheme. A large portion of the money was used by the group for personal expenses, including more than $2.5 million that Gallo used for himself and his family.
The group further made misrepresentations about the company’s hierarchy, telling investors after the mid-point of 2010 that Casey was president when in actuality Howard was. The group allegedly failed to alert investors that Gallo and Howard were convicted felons and that Gallo was actually still on probation. Howard had been convicted on cocaine possession and firearm charges in the Northern District of Florida, while Gallo had been convicted of cocaine possession and bank fraud charges in New Jersey.
If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.