Cleveland: Woman in $60M Ponzi scheme pleads guilty

8:49 PM, Aug 20, 2012   |    comments
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CLEVELAND -- Joanne Schneider was sentenced Monday to a nine-year prison term after she pleaded guilty to 11 felony counts, including engaging in a pattern of corrupt activity.

Schneider will receive credit for approximately 2 ½ years that she has already served in this case.

Schneider's trial was scheduled to begin Monday, but instead she entered guilty pleas on the following 11 counts:

  • 1 count of engaging in a pattern of corrupt activity
  • 5 counts of securities fraud
  • 2 counts of selling unregistered securities
  • 1 count of making misrepresentations in the sale of securities
  • 1 count of theft involving an elderly victim
  • 1 count of money laundering

The Ohio Department of Commerce Division of Securities referred the case to Cuyahoga County Prosecutor Bill Mason for prosecution.

Schneider engaged in a massive real estate Ponzi scheme where she bilked $60 million from investors. The money was used to fund her real estate development projects, including the largest undertaking, the multi-million dollar Cornerstone Project.

The project was to be a Main Street-style entertainment complex on W. 130th Street in Parma Heights, which she never developed.

Schneider's scheme unraveled when the Ohio Division of Securities received a complaint from a family member of an investor.

The complainant was suspicious that his mother was promised a 16-20 percent interest on her investment. He requested that the Division investigate his mother's investment.

In May 2004, the Division issued a cease and desist order against Joanne Schneider for selling unregistered promissory notes.

After continuing to sell promissory notes in violation of the cease and desist order, the state was successful in obtaining a preliminary injunction against Schneider.

A few months later, she was found to have violated the preliminary injunction by continuing to sell securities without the permission of the court and a court-appointed Special Master.

A receiver was then appointed to take possession of the joint assets of Joanne and her husband Alan Schneider, and the individual assets of Joanne Schneider.

The receiver recovered $10.5 million for the investors.    


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