A 51-year-old Minnesota man pleaded guilty Tuesday to running what prosecutors say was the largest Ponzi scheme in Orange County history.
Gerard Frank Cellette accepted a plea deal from Orange County Superior Court Judge Patrick Donahue, who is expected to sentence the defendant to 35 years in prison on Tuesday.
Given the time he has spent in custody since his arrest in 2013 and time off for good behavior, Cellette could get out of prison in about 15 years, Senior Deputy District Attorney Marc Labreche said.
Had he been convicted at trial, Cellette was looking at 329 years and four months in prison for orchestrating the $250 million Ponzi scheme that resulted in about $53 to $54 million in losses nationally, Labreche said.
In Orange County, victims lost about $21 million, he said, adding that the defendant took in about $150 million from Orange County investors.
Cellette pleaded guilty to 455 felony counts, including 382 counts of money laundering, 42 counts of selling securities without a license and 27 counts of using untrue statements in the purchase and sale of a security, Labreche said.
Donahue will spend Tuesday sorting out how much restitution each victim will receive, but there doesn't appear to be any way Cellette can pay his victims back, Labreche said.
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"This was unique in that he did it without ever coming into the state," the prosecutor said.
Cellette owned a small-time printing business called Minnesota Print Services Inc. when he concocted the scheme that promised customers discounts if they paid in cash, Labreche said.
He told victims he had printing contracts with major corporations and needed the cash upfront to get a 20 percent discount on purchasing paper, Labreche said.
There never were any printing contracts, and the defendant spent the money on a lavish lifestyle that included cars, flights on private jets and multiple homes, where he had a Go-Kart track, bowling alley and a 1950s-themed malt shop installed, among other luxuries, Labreche said.
Cellette paid back some of the investors by signing up new investors, Labreche said.
When Cellette was charged in Orange County, he was serving a six-year prison sentence in Minnesota, which he has completed, Labreche said. Cellette met an Orange County man while he was visiting a relative in Minnesota in 2005, and the Orange County resident invested in Cellette's business, Labreche said. Cellette paid back the investment, with profit, and offered more investment opportunities, the prosecutor said.
He typically offered investors returns of 10 to 15 percent in two to three months, according to Labreche, who said there were victims in California, Minnesota, Georgia, Arizona, Colorado, Hawaii and Illinois.
Co-defendant Adam Jay Boskovich of Laguna Niguel pleaded guilty and was sentenced in May of last year to a day in jail and five years of informal probation. Boskovich had his felony conviction reduced to a misdemeanor. Boskovich reached a settlement in a lawsuit on restitution he owed his victims, his attorney, Paul Meyer, said last year.
Prosecutors had issues going forward with some counts against Boskovich because of the statute of limitations. The victims preferred the civil suit settlement to going forward with criminal prosecution, Labreche said.
Boskovich lied to his investors, but he apparently did not realize Cellette was running a Ponzi scheme, Labreche said.
