Ponzi Tracker Reports: Ex-Soccer Club President Accused of $5 Million Cigarette Ponzi Scheme

A New York man is accused of using his former position as head of a local soccer club to dupe victims out of more than $5 million in an elaborate Ponzi scheme that promised sky-high returns from the financing of wholesale cigarettes to a Native American Indian reservation.  Robert Rocco, 48, was indicted on five counts of wire fraud and nine counts of mail fraud, each of which carries a maximum potential sentence of twenty years in federal prison.  In addition, the government is also seeking forfeiture of all proceeds traceable to the fraud, including Rocco’s New York house.

According to the indictment, Rocco was the president of the Dix Hills Soccer Club (“DHSC”), which allowed him exclusive control of the club’s bank accounts.  Rocco was also the founder and owner of Limestone Capital Services (“Limestone”), which purported to provide wholesale financing of cigarette purchases for a tobacco shop located on the Shinnecock Native American Reservation (the “Reservation”).  Limestone also allegedly provided credit card services to retail users seeking to purchase cigarettes from the Reservation.

Beginning in 2006, Rocco solicited friends and family members of the DHSC to invest in Limestone, representing that investor funds would be used to finance the wholesale purchase of cigarettes on the Reservation.  Investors were provided with promissory notes that stated annual rates of return ranging from 15% to 18%.  Rocco also solicited the assistance of an unnamed acquaintance to recruit additional investors.  In total, over two dozen investors entrusted amounts ranging from $25,000 to $1.2 million with Limestone for a collective investment of over $5 million.

While investors received regular checks purporting to be interest payments, Rocco revealed in February 2009 that a rival Indian tribe had stolen approximately $4 million – $5 million of uninsured cigarette inventory from the Reservation, resulting in a massive loss.  Rocco then formed Advent Equity Partners (“AEP”), which purported to deal in credit card processing services, and solicited a total of $1.3 million from an unnamed victim.

According to authorities, Rocco was not able to pay his advertised returns through legitimate businesses such as Limestone or AEP, but rather used incoming investor funds to pay returns to existing investors in classic Ponzi scheme fashion.  In addition, Rocco is accused of diverting nearly $67,000 from DHSC bank accounts to cover redemption obligations to investors.  This had the effect of depleting club coffers, and only through soliciting donations from benefactors was DHSC able to stay afloat.

After his arrest and arraignment, Rocco is reported to have posted bond.

The indictment is below:

Rocco Indictment by jmaglich1

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