A Connecticut man who scammed victims out of more than $500,000 in a classic Ponzi scheme is not too sick to serve time for his crimes, despite pleading from his attorneys that a sentence of home confinement was more appropriate. United States District Court Judge Vanessa Bryant sentenced Stephen Blankenship, 64, who came to be known as "Danbury's Bernie Madoff" for the toll on his victims, including elderly members of his church, in three states. Blankenship was also ordered to pay restitution to his victims, although the state of his finances remains unknown.
From at least 2002, Blankenship solicited customers to invest their funds through Deer Hill Financial Group, LLC ("Deer Hill"), a company owned and operated by Blankenship. Blankenship served as a financial advisor at several broker-dealers, and used his position to lure many of his customers to transfer their holdings to Deer Hill by telling them they could achieve a greater rate of return. According to Blankenship, investor funds would be placed in established securities such as mutual funds or equities. Blankenship also courted investors from his church, where he served as an elder. In turn, investors were provided with regular account statements showing purported gains in their holdings.
However, Blankenship never invested funds with Deer Hill as promised. Instead, he ran the classic Ponzi scheme, misappropriating investor funds for his own personal use that included luxurious travel, grocery shopping, and mortgage payments on his home.
After the scheme collapsed in late 2011, Blankenship was arrested. He pled guilty in September to one count of mail fraud and one count of security fraud, and faced a maximum sentence of twenty years in prison. The Securities and Exchange Commission has also filed a civil enforcement proceeding against Blankenship seeking the return of all ill-gotten gains.
A copy of the SEC Complaint is here.
For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.
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