Syracuse Businessman Charged With Investment Fraud
Attorney General Spitzer today announced that a Syracuse businessman has been charged with defrauding dozens of Onondaga County residents of $1.1 million in a scheme to raise funds for his failing water softener equipment company.
William Olivieri, owner of Neptune Soft Water Company, Inc., 2740 Erie Blvd. East, was arraigned today in Syracuse City Court. He faces a single count of Scheme to Defraud in the First Degree, a Class E felony punishable by 1 and 1/3 to 4 years in prison.
"Mr. Olivieri misled investors on the precarious financial condition of his company," said Spitzer. "Those who trusted him lost thousands of dollars. This case underscores the importance of doing exhaustive research before investing in any business venture."
Neptune Soft Water, Inc., has been installing water treatment systems in area homes since 1963. While many customers paid cash or charged the $4000 cost of the systems to their credit cards, some signed installment contracts with Neptune to pay for the water systems over a seven-year period at interest rates of up to 20 percent.
Olivieri's illegal scheme began at least 10 years ago as a way to raise cash for his struggling water treatment business that would never have qualified for a bank loan. Olivieri began offering to the public investments in Neptune with promises of high returns -- 12-18 percent -- at low risk. His ability to make such claims was based on the fact that customers of his water softener business were paying him finance charges of up to 20 percent on installed treatment systems, theoretically enough income to offset the promised payments to investors.
In all, Olivieri received money from some 42 investors.
But contrary to what Olivieri told his investors, their money was not secured by payments from his water customers' installment contracts, leaving him and Neptune unable to make good on promises to guarantee payments to the investors.
In order to conceal Neptune's insolvency from investors, and to avoid bankruptcy, Olivieri paid some of Neptune's debts with money borrowed against his personal credit cards. He also borrowed money from his investors by offering them an additional five percent interest if they left their money in a "holding account" at Neptune.
Olivieri and Neptune never registered in New York to sell securities, which prompted an investigation by the Attorney General's office.
Olivieri has agreed to plead guilty to the charge against him and begin making restitution to investors from the sale of personal assets. He is expected to enter his plea in May in Onondaga County Supreme Court.
The case against Olivieri is being handled by Assistant Attorney General Verle Johnson of the Investor Protection and Securities Bureau and by Assistant Attorney General Maria Moran and Investigator Shaun Thurston of the Attorney General's Syracuse Regional Office with support of members of the Attorney General's Criminal Prosecutions Bureau. The Attorney General's office acknowledges the valuable assistance of the Northeast Regional Office of the U.S. Securities and Exchange Commission in identifying investors and determining the amount of restitution owed to them.