MARBLEHEAD — An investment adviser from Marblehead has been charged with defrauding two elderly investors by putting their money in what prosecutors say turned out to be a massive Ponzi scheme.
Ryan Nestor, 32, was cited yesterday in a two-count information charging him with wire fraud.
Prosecutors say he defrauded the clients out of more than $750,000 by investing their money in a company that was later sued by the Securities and Exchange Commission.
Nestor, who runs a business called Harbor Point Capital LLC, was a former registered representative for a Mass Mutual-related business. Prosecutors allege that Nestor "misappropriated" the money by investing two clients' funds in what turned out to be a massive Ponzi scheme, without the knowledge or consent of his clients.
The two clients live on Martha's Vineyard. According to the information filed in U.S. District Court, Nestor, in April and May 2007, invested their money in a California-based company called AOB Commerce Inc., which purported to make loans to businesses in Asia.
Prosecutors allege that Nestor made investments on behalf of both clients, $170,000 for one client and $590,000 for the other in AOB by forging their signatures on authorizations to wire money from their accounts to a bank in California.
Nestor allegedly had an agreement with AOB under which he would receive a portion of the anticipated return on the investment.
A month later, in June 2007, the SEC sued AOB, alleging that it was basically a giant Ponzi scheme that used investor funds to pay other investors.
If convicted, Nestor could face up to 30 years in prison and a $1 million fine on each of the two counts.
Prosecutors are also seeing the forfeiture of Nestor's home at 51 Bubier Road in Marblehead, which he purchased in 2007 for $725,000.
Generally, when prosecutors file an information, it means a defendant has waived his right to have the case presented to a grand jury for indictment.
His lawyer, Peter Krupp, said last night that Nestor "had no knowledge the investment he made on behalf of his clients was not legitimate. In fact, he invested and lost his own money in that investment."
"Mr. Nestor has cooperated with the government throughout this investigation and deeply regrets the losses suffered by his clients," Krupp went on to say.
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