Three Indicted on Watermark Financial Services Ponzi Scheme Case

BUFFALO, N.Y., March 26 /PRNewswire-USNewswire/ -- United States Attorney William J. Hochul, Jr. announced today the unsealing of a 51-count indictment charging Guy W. Gane, Jr., 55 , James F. Lagona, 50, and Ian Campbell Gent, 58, all of Amherst, NY with mail fraud and conspiracy to commit mail fraud. The indictment also charges Gane with securities fraud and money laundering. Each charge carries a maximum penalty of 20 years in prison, and fines of between $250,000 and 5 million dollars, or both.

United States Attorney William J. Hochul, Jr. stated, "There are certainly many legitimate investment companies who provide valuable financial services: however, this is yet another cautionary tale that investors should be careful with their money, and if it seems too good to be true it probably is."

Assistant U.S. Attorney Gretchen L. Wylegala stated that the Indictment charges the defendants with operating an investment fraud scheme in connection with financial service firms M-One Financial and Watermark Financial Services Group, both of which Gane owned, and which operated out of 2425 Sweet Home Road in Amherst, NY until May 2008. when federal agents executed a search warrant and the SEC filed a civil action in federal court. The scheme, typically referred to as a Ponzi scheme, involved promising high returns to investors on "debenture" investments or "promissory notes."

The indictment alleges that Gane and others falsely told the investors that their money would be used to invest in waterfront real estate and in building dormitories in Maine. No such investments were made; Gane used the money to pay back earlier investors, to pay salaries to himself and his employees, to advance cash to his children, to pay travel expenses, mortgage expenses, rent, cleaning, landscaping and other operating expenses. The other defendants, Ian Gent and James Lagona, worked for Gane and his companies, and encouraged the sale of debentures or promissory notes to pay off earlier investors. Lagona falsely assured investors that their investments were safe. It is believed that the losses suffered by the investors totaled over $5,000,000.

United States Attorney Hochul further stated, "Any other person who feels they've been victimized should contact the United States Postal Service."

President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The Indictment was the culmination of an investigation on the part of Special Agents of the United States Postal Inspection Service, under the direction of Robert Bethel, Inspector in Charge, U.S. Postal Inspection Service, Boston Division, and Special Agents of the Internal Revenue Service, Criminal Investigation Division, under the direction of Patricia J. Haynes, Special Agent in Charge of the New York Field Office . The evidence was presented to the Grand Jury by Assistant U.S. Attorney Gretchen L. Wylegala, who will be handling the trial of the case.

The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.

SOURCE U.S. Department of Justice