Fund Manager Admits To $80M Ponzi Scheme
PHILADELPHIA (AP) - A solo fund manager pleaded guilty Friday to operating an $80 million Ponzi scheme that defrauded more than 70 victims, including a family foundation and a couple who lost their life savings.
Joseph S. Forte, 53, of Broomall admits he lured investors by promising returns ranging from 18 to 38 percent - and pledged they would never lose money.
But losses are ultimately what happened as Forte paid himself millions, bought a Sea Isle, N.J., beach house and donated more than $1 million to charity, including $200,000 to Malvern Preparatory School on Philadelphia's tony Main Line.
"I think it was a pyramid of trust,'' said Steve Bell of Broomall, a school guidance counselor whose wife is heading back to work after they lost most of their savings.
"He was very good at nurturing relationships. There are a lot of intelligent people that were victimized here,'' he said.
Investigators say Forte blew through more than $20 million from 1996 to 2008.
He declined comment as he left the courtroom to await his Oct. 2 sentencing, when he faces a guideline range of 11 to 14 years. But he said in January that all the money was gone, hinting that a small problem early on had snowballed.
"I made a mistake years ago and I tried to work my way out of it and couldn't,'' Forte said at the time.
His restitution will top $20 million, and his family will lose both the shore house and their suburban home, court documents said. Forte, a 1978 graduate of Villanova University, is married with four children.
The Bells will at least keep their house because they had paid it off. But they are quickly making what they call "lifestyle changes'' that include Cindy's return to work after years as a stayat home mother. The couple has one daughter in college and another in high school.
Cindy Bell's family members lost yet more money in Forte's fund, including millions from a family foundation. The Thornton D. and Elizabeth S. Hooper Foundation, started after her father and uncle sold an oil transport business in 1980, had given to churches, schools and other charities. Neither the foundation nor the Bells can now support the causes they once did.
"It's the ripple effect of this on other people. ... That's the real sadness,'' said Steve Bell, who said he had presumed there were more safeguards in the investing system.
The Bells said their family has grown closer, and they do not begrudge the charities that received money from Forte.
Forte, for instance, had served as a board member and fundraiser in recent years for Malvern Prep, which his son attended.
He pleaded guilty to three fraud counts and one count of money laundering.