EASTON, Conn. -- A 54-year-old former Easton man was sentenced on Wednesday to 25 years in federal prison for defrauding investors, including a Connecticut church, of $27 million, the U.S. Attorney's Office in Connecticut announced.
Gregory Loles, who operated out of Danbury, has been detained since his arrest on Dec. 15, 2009. On July 26, 2011, he pleaded guilty to one count of mail fraud, one count of wire fraud, one count of securities fraud and one count of money laundering.
“For nearly a decade, this defendant abused the trust of friends and clients, and stole millions from his own church,” Deirdre M. Daly, U.S. attorney for Connecticut, said in a statement.
"This long sentence is clearly appropriate as the defendant preyed upon and devastated innocent victims who had placed their trust in him.”
He was sentenced by U.S. District Judge Alvin W. Thompson in Hartford. His prison term will be followed by three years of supervised release.
“Today’s sentence will hopefully deter investment advisers and other financial services professionals from defrauding their investors,” said Patricia M. Ferrick, special agent in charge of the New Haven Division of the FBI in a statement.
"Unfortunately," Ferrick said, "this is an all too common occurrence and another reminder to investors to do your due diligence before investing with anyone.”
According to court documents and statements made in court, Loles owned Apeiron Capital Management Inc., an investment adviser and broker dealer registered with the U.S. Securities and Exchange Commission from 1995 through 1998, at which point the registrations were canceled.
However, Loles continued to operate Apeiron and falsely represented it as a registered investment management firm. He also was the majority owner and managing member of Farnbacher Loles Motor Sports, Farnbacher Loles Racing, Farnbacher Loles Street Performance, and various other Farnbacher Loles businesses, which were based in Danbury, and engaged in professional race team operations.
For nearly a decade, Loles falsely represented to numerous victim-investors, including friends and fellow parishioners at St. Barbara’s Greek Orthodox Church in Orange, that he would act as their investment adviser and invest their funds through Apeiron.
He also was entrusted to manage the church’s investment funds, including the endowment fund and the building fund. However, instead of investing funds as promised, he used the money to fund his Farnbacher Loles operation, to pay personal expenses and to purchase a large home with a pool, tennis court and multi-car garage for his sports cars.
To keep his scheme from being detected, Loles provided investors with fraudulent account statements and made periodic “lulling” payments to certain investors using a portion of other victim-investors’ funds.
Through this scheme, he stole $27 million from more than 50 victims, including $2 million from his church and $14 million from a single family in Greece.
Some of the individual investors lost their life savings, and provided Loles with funds that had previously been invested in IRAs, 401(k)s, or were proceeds of life insurance payments.
Thompson found that Loles attempted to obstruct the investigation by making false statements to the FBI after his arrest. He also found that Loles willfully attempted to mislead the court and committed perjury while testifying during multiple pre-sentencing hearings.