The former owner, CEO and president of Commercial Mortgage and Finance Company in Rockford, Ill. was indicted by a federal grand jury. Anthony F. D’Agostino was charged with 17 counts of mail fraud, one count of wire fraud, and one count of securities fraud, in connection with a scheme to defraud investors in Commercial Mortgage. According to the indictment, D’Agostino raised capital for his business by selling installments known as Promissory Notes and Certificates of Participation to investors. The indictment alleges that D’Agostino concealed from the investors the fact that Commercial Mortgage had a negative net worth that steadily increased during the years that D’Agostino owned the company. The indictment also charges that D’Agostino concealed from the investors the fact that Commercial Mortgage was operated as a Ponzi scheme, with money received from the sales of new Promissory Notes being used to pay principal and interest owed on older Promissory Notes. According to the indictment, this fraud scheme took place from August of 1997 through Oct. 8, 2008, and exposed the investors to losses of $20 million.
The indictment also charges that D’Agostino made specific false statements to several of the investors. For example, the indictment alleges that D’Agostino told some investors that the financial condition of Commercial Mortgage was strong and that the company was doing well. In addition, the indictment alleges that D’Agostino told some investors that investments with Commercial Mortgage were safe and secure.
Each count of mail fraud and wire fraud carries a maximum penalty of 20 years in prison and a maximum fine of $250,000, or an alternate fine totaling twice the loss or twice the gain derived from the offense, whichever is greater. Securities fraud carries a maximum penalty of up to five years in prison and fine of up to $250,000. If convicted, the court must impose a reasonable sentence under the advisory United States Sentencing Guidelines, as well as restitution.