Steel Admits Stealing: Brooklyn Man Guilty in Ponzi Scheme

February 23, 2012 Brooklyn Eagle Staff

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CADMAN PLAZA EAST — While infamous swindler Bernie Madoff cast a spotlight on Ponzi schemes several years ago, it doesn’t mean an end to the longtime money-making scam. Nor does it mean that the feds are letting up on their investigations either.

Just days ago, Hasaan Steel, 27, of Brooklyn, pleaded guilty to wire fraud arising from his operation of a Ponzi scheme.

The guilty plea proceedings were held before United States District Judge Nicholas G. Garaufis, at the federal courthouse in Brooklyn. Steel faces a maximum statutory sentence of 20 years in prison, as well as payment of restitution to the victims of his crime.

The guilty plea was announced last week by Loretta E. Lynch, United States Attorney for the Eastern District of New York and Victor W. Lessoff, acting Special Agent-in-Charge for Internal Revenue Service’s Criminal Investigation New York Field Office, as well as several other high-ranking federal agents.

According to the indictment and his guilty plea allocution, Steel held himself out as a self-employed day-trader and solicited investments in an investment pool that he claimed to manage.

Steel represented to investors that he would invest their money in stocks and commodity futures contracts, and that he had consistently generated monthly returns of more than 20 percent. Steel’s representations about the rates of return he earned from investing and his trading activity were false.

Similarly, Benie Madoff, in his $50 billion Ponzi scheme, had consistently told his clients that their returns were in the double-digits.

In fact, neither was providing accurate information.

“This investigation is another illustration of how Ponzi scheme operators tout high rates of return in order to attract victims,” IRS Acting Special Agent-in-Charge Lessoff stated. “People should diligently check into such returns before investing. They should not blindly follow the advice of any one person.”

Steel traded only a small portion of the money he received from investors and used the bulk of the solicited funds to pay prior investors, to gamble and for other unauthorized purposes. As part of the scheme, Steel sent investors e-mails reflecting fraudulent returns and fraudulent trading account balances for the investment pool. The scheme resulted in more than $400,000 in losses to victim investors.

“The defendant solicited money with bogus claims of trading performance and lied about what he did with that money,” stated United States Attorney Lynch. “Claiming to represent a diversified investment pool, in reality he represented only himself and his greed, plundering his customers’ accounts to support his gambling habit and personal expenses. Such conduct undermines the public’s confidence in the nation’s financial markets and will be vigorously investigated and prosecuted.”

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force.

—Ryan Thompson
Brooklyn Daily Eagle