DA: Millions lost in Mass 'Ponzi scheme'

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March 18, 2013, 6:18 pm
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(NECN: Peter Howe, Boston) - Casino gambling binges and casino debts. Rent payments for the husband’s mistress. A $13,000 Rolex watch. A $51,500 student loan. And $350,000 to get out of probation for allegedly swindling a 94-year-old aunt out of real estate.

Those are just some of the illicit payments Suffolk County prosecutors allege were made by Steven and Lori Palladino and their son, Gregory, 28, with proceeds from a multi-million-dollar Ponzi scheme involving their company, Viking Financial. Viking was organized in 2007 in an office over the iScream Works ice-cream shop that Steven Palladino, a repeatedly convicted thief, cofounded in the West Roxbury neighborhood of Boston.

Since Viking Financial’s founding in May 2007, the company took in some $4 million from investors who thought they were putting money into high-interest real-estate loans, prosecutors said. By the time Boston Police and the Suffolk County District Attorney moved in last year and after a grand-jury investigation seized Viking’s operating account on a warrant Dec. 6, just $160,000 was left, authorities said.

Monday, Steven Palladino, 55, was arraigned in Suffolk Superior Court on charges from an 11-count indictment including larceny and false bookkeeping. Assistant District Attorney Benjamin Goldberger told Clerk Magistrate Gary D. Wilson that “the investigation remains open, and I expect additional charges in the coming months.” Goldberger said that “at the end of this, I fear there are going to be a significant number of investors out of a significant amount of money, in the millions.” Goldberger said as investigators looked through Viking Financial’s accounts, they established that “the books were cooked” with nearly $2 million in “fake loans” and numerous other irregularities.

After hearing reports of the Palladinos’ international travels and that they had family members’ passports stacked on their kitchen table – as if to be ready for an imminent departure – when detectives executed a search warrant at the family’s Lyall Street home in West Roxbury, Wilson granted the government’s request that Steven Palladino be held on $250,000 cash bail. He had to surrender his passport and if he posts bail will be forbidden from travelling outside Massachusetts and will have to wear a GPS monitoring bracelet.

Palladino’s lawyer, Walter Prince of Prince Lobel Tye LLP, said that to date, none of the Palladinos’ investors have lost any money and have received all the interest payments they were promised and have promissory notes for their principal. “No one has lost a dime,” Prince said, adding, ”He is entitled to the presumption of innocence, and I hope everyone respects that.”

“He is not a flight risk, and he is certainly not a danger to the community,” Prince said, adding that Steven Palladino has a long record of supporting West Roxbury civic causes and a little league team and charities including Dana-Farber Cancer Institute and the Franciscan Children’s Home. “You cannot have any deeper roots in the community than Mr. Palladino,” Prince said.

Before his wife and son set up Viking Financial – a company in which Steven Palladino at times, prosecutors said, described himself as president or vice president or CEO – Steven Palladino had been convicted of larceny two dozens times in Norfolk and Suffolk Superior Court, according to the DA’s office. He is being charged as a “common and notorious thief,” which would, if he is convicted, give prosecutors grounds to ask for a longer prison sentence.

In 2010, prosecutors said, Steven Palladino used nearly $350,000 from a Viking account to buy a cashier’s check to pay off a mortgage and return property to his 94-year-old aunt he was alleged to have fraudulently persuaded her to sign over to him, in order to get off probation.

Prosecutors also said Viking funds were also used to pay over $240,000 to various casinos including Atlantis Resort and Casino on Paradise Island, and Steven Palladino’s patronage of casinos was so extensive he got flown down to Caesars Atlantic City on a private jet and was allowed to take out $170,000 cash from Mohegan Sun in Connecticut last autumn on a “marker,” or personal IOU.

Lori Palladino is set to be arraigned in Suffolk Superior Court April 4. Wilson said he expected Steven Palladino would go on trial in late November or early December.

Who’s out how much money, and how much hope they have of getting how much back are all still open questions.

With videographer John E. Stuart

Tags: Boston, massachusetts, scam, Peter Howe, Ponzi scheme, Steven Palladino, Lori Palladino, Viking Financial
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