Ponzi Tracker Reports: Boston Family Weighs Plea Deal For $10 Million Ponzi Scheme

A Boston family accused of masterminding a Ponzi scheme that bilked investors out of at least $10 million has a one-week deadline to strike a plea deal with prosecutors or else face trial.  Steven Palladino, 55, his wife Lori Palladino, 52, and son Gregory Palladino, 28, learned from a Massachusetts judge at a hearing on Tuesday the expected sentencing should the trio decide to enter into a plea agreement.  According to Suffolk Superior Court Judge Janet Sanders, the elder Palladino can expect a 10-to-12 year sentence, while his son can expect a sentence of up to two years.  Lori Palladino would not serve any prison time, and instead would receive a suspended sentence.  The family has until by January 21, 2014 to decide whether they will accept the plea agreement or take their chances at trial.

The trio were the sole principals of Viking Financial Group (“Viking”), which advertised itself to investors as a high-yield, low-risk investment strategy carrying above-average returns by making secured loans to borrowers at high interest rates.  These purportedly profitable loans allowed Viking to pay an above-average return to investors while still pocketing the difference for a healthy profit.  Based on these representations, Viking took in more than $10 million from at least 40 victims.

However, in reality Viking made very few loans, and of these loans, many were made in violation of a state statute prohibiting loan interest rates exceeding 20%.  Indeed, three of the loans extended in 2007 and 2008 carried interest rates exceeding 60% – which would later serve as the basis for three usury charges against Steven Palladino.  The majority of investor funds served only to support a lavish lifestyle for the Palladinos that included Bahamas trips, rent for Steven Palladino’s mistress, and hundreds of thousands of dollars in gambling losses.  Additionally, nearly $400,000 in investor funds were used to satisfy a condition of Steven Palladino’s probation stemming from a 2007 conviction for, ironically enough, defrauding an elderly relative.

The family was indicted back in September on charges that they carried out one of the largest investment scams in Boston since Charles Ponzi’s infamous scheme nearly 100 years ago. Each of the three was charged with one count of larceny over $250 and larceny over $250 from a person over 60.  The three were also charged with conspiracy to commit larceny, with Gregory Palladino facing an additional three counts of usury and one count of tampering with evidence. 

Following the indictment, Steven Palladino was recently arrested on loan-sharking charges after prosecutors accused him of seeking out an investor for repayment of a Viking-made loan.

Previous Ponzitracker coverage is here.

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