Ponzimonium

“In reality, Healy simply used the investors’ funds to live a lavish lifestyle, purchasing millions of dollars of luxury items such as a $2.4 million mansion furnished with over $2 million in improvements, $1.5 million in men’s and women’s jewelry, numerous exotic vehicles and performance sports cars, including a Bentley, Ferraris, Lamborghinis, and Porsches worth over $2.3 million, and employing a team of bodyguards, drivers, nannies, and maids to serve him and his family on a daily basis.”

—Excerpt from the indictment against Sean N. Healy1

In July 2009, the CFTC charged Sean Nathan Healy of Weston, Florida with defrauding investors of over $14 million. Healy falsely claimed that he would use their money to trade, among other things, commodity futures contracts and commodity options contracts on their behalf. Contrary to Healy’s claims, he did not use any of these funds for investments; rather, Healy went on a spending bender with his wife Shalese, whose profession as a Hooters waitress became media fodder during this case.2

Healy first graced Florida with his presence in 2001. He left New York after the investment firm he worked for, Guru Investment, closed upon commencement of an investigation into its trading activities. Despite just turning the corner of his thirtieth birthday, Healy’s story was that he had retired to Florida after making millions of dollars on Wall Street and selling his investment firm for somewhere in the range of $30 to $40 million. He told people that he was still day trading stocks and commodities for enormous profits, but that this wasn’t making him happy—he wanted his friends, family, and even acquaintances to make money along with him.3

Though investigators have tracked Healy’s fraud as far back as 2003, Healy ramped up his activity beginning in May 2008. In order to lure investors—who, according to Assistant US Attorney Bruce Brandler, included his own unsuspecting mother and mother-in-law—Healy represented that he owned or had access to numerous shares of stocks in companies like Ruth Chris. He claimed these shares were valuable because they were “restricted,” that is, not generally available to the public. At times, he used financial terms like “options” or “warrants” in describing these purported equities, claiming that he could sell the shares to his investors at a huge discount. According to Healy, when the shares became “unrestricted” in a few months’ time, they would become extremely valuable and return huge profits upon sale. Healy also represented that he continued to trade stocks and futures from his home computer and participated in investment partnerships like “Pride Rock” with investors “Matt,” “Andy,” “Rich,” and “Mike.”4 By investing with him, Healy promised that investors could share enormous wealth.

Throughout the scheme, Healy repeatedly assured investors that his futures and options trading was earning excellent returns and that distributions of tremendous trading profits would be made in February 2009. Healy, however, never provided investors any detail or documentation regarding what investments he made, what brokerage accounts he had, and who the other participants were in his partnerships. This was the biggest red flag: no conventional forms of documentation were ever provided to investors.5 There were no trade confirmations, brokerage account statements, or stock certificates. Instead, Healy provided verbal assurances, emails, phony account statements, and for the most part, handwritten statements purporting to show successfully traded futures and options.6 In addition to the handwritten statements, Healy consistently told investors that he achieved only trading successes, stating on one particular occasion, “this is almost too easy … there’s times and this is one of the few times in your life that you’re going to see oil go up like this, therefore, you have to take advantage of the opportunity because this only happens like [sic] a once in a lifetime.”7

To get the funds he needed to keep the fraud going, Healy directed investors to wire funds directly to bank accounts in Florida or to write checks payable to the entities he controlled. The bank accounts were all in the name of Shalese, which should have raised another red flag. Healy, however, had this covered. He told investors he kept all of his assets and accounts in Shalese’s name in order to conceal them from his ex-wife.8

For the record, Healy didn’t retire to Florida at the age of thirty with millions in the bank. His tax returns for 2001 show that he reported a total income of less than $23,000 and a loss of $5,000 for his sale of Guru Investments stock. His income was negative for 2004–2007. As for the stock sales, commodity futures trading, investment partnerships, and Matt, Andy, Rich, and Mike, there is no evidence that Healy did any of this or that these people even existed.9

During the time that Healy received money from investors, he and Shalese used the funds to create the lavish lifestyle consistent with the story Healy was telling. The Healys purchased the $2.4 million Weston mansion formerly owned by football legend Bernie Kosar and spent another $2 million on home furnishings and home improvements, including Versace crystal, built-in safes, built-in stereo systems, at least seventeen plasma televisions, a $500,000 theater screening room, smart-house wiring and panels, and video surveillance systems.10 In addition to an entire room dedicated to watching sports on five plasma televisions, the Healys collected over fifty pieces of sports memorabilia, including a signed Brett Favre #4 New York Jets jersey and a Joe Frazier autographed boxing glove.11

Someone in that house also liked music. The inventory of items purchased by the Healys included Stratocaster guitars signed by the Doobie Brothers and Fergie and “The Ultimate Grammy Collection” Epiphone Guitar signed by such legends as Bruce Springsteen, Madonna, Paul McCartney, and BB King.12 The Healys purchased a fleet of luxury vehicles in colors such as lime green and “blue & cream,” including multiple Ferraris, Lamborghinis, Porsches, a Bentley, a Maserati, a Saleen, a Lincoln Limousine, and of course, a metallic burnt-orange Hummer golf cart.13 They purchased approximately $1.4 million in watches and other jewelry laced with diamonds and precious stones, including brands such as Rolex, Piaget, Patek Philippe, Hublot, Paris Hilton, Gregg Ruth, and Levian Couture.14 He also converted the invested funds into gold and silver bullion and coins.15 Healy used investor money to lease 2,500 square feet of garage space to store the vehicles, pay for an exclusive country club membership, and lease luxury suites at the Bank Atlantic Center Arena for sporting and other entertainment events.16

Occasionally, investors received money. Healy sometimes paid investors “profits” or returned part of their investments using funds obtained from other investors in signature Ponzi style.17

The Healys’ binge was short-lived. When February 2009 rolled around, Healy told investors that the futures and options trading account, which allegedly had a $79.3 million balance, was temporarily restricted because certain transactions “were still open.” By March 2009, Healy told investors that “regulatory issues” had reduced the value of the account and that only distributions of principal would be available. These statements were, of course, false since no trading actually occurred and no such account ever existed. Investors finally had enough, and a fraud action was initiated against Healy and his wife on March 16, 2009, in the US District Court for the Southern District of Florida.18

The US Attorney’s Office for the Middle District of Pennsylvania (USAO), the district where the majority of investors resided, became aware of the fraud action and began a federal grand jury investigation.19 During the course of the investigation, Healy lied to his attorney and federal investigators by furnishing numerous falsified documents, including fictitious affidavits, bank records, and brokerage account records from a representative named “Mike Hein” at a firm called PCF and for an account he claims to have maintained at Interactive Brokers (Interactive), a futures commission merchant registered with the CFTC.20 PCF is not a registered futures trading firm or broker-dealer, and the purported address on the PCF documents produced to the USAO is nonexistent. Likewise, there is no record of any registered representative by the name of “Mike Hein” or “Michael Hein” at any firm registered with the CFTC or SEC. The phone number for customer assistance listed on the PCF account statements was listed to a “Mark Hein,” email address mhein54@yahoo.com. The grand jury investigation revealed that Healy, or someone acting on his behalf, purchased a prepaid wireless cell phone on April 6, 2009, from a convenience store near Healy’s Florida home and created the email address to corroborate the false story that Healy gave the very next day during his sworn deposition.21

In October 2009, Healy was indicted in the Middle District of Pennsylvania for multiple counts of wire fraud, mail fraud, money laundering, and obstruction of justice.22 On November 23, 2009, Healy pled guilty to two counts of wire fraud and one count of unlawful monetary transaction, and was released on conditions including electronic monitoring and participation in a substance abuse evaluation. Between November 23, 2009 and December 2, 2009, Healy violated bail twice: once by failing to adhere to the instructions of the US Pretrial Services Office with regard to remaining in his supervisory residence while awaiting installation of monitoring equipment, and once for his continued use of controlled substances. Just one week into his supervised release, Healy went missing, turned up, submitted to a drug test, and tested positive for the presence of cocaine, opiates, benzodiazepine, and amphetamines.23 By January 7, 2010, Healy was in custody.24

On March 31, 2010, Healy was sentenced to 188 months imprisonment (about 15½ years), $16,773,995 in restitution, and three years supervised release. Healy’s prison wages will be garnished for restitution.25 Mr. Healy, prisoner #16444-067, hasn’t given up yet; he appealed his sentence to the United States Court of Appeals for the Third Circuit.26

OBSTRUCTION OF JUSTICE—Hindering or interfering with law enforcement and investigations

RELIEF DEFENDANT—A nominal party to a proceeding who is expected to give up ill-gotten gains or property innocently held as a result of a co-defendant’s wrongdoing

On June 22, 2010, the US District Court for the Middle District of Pennsylvania entered a consent order of permanent injunction, including disgorgement, a civil monetary penalty, and equitable relief against Sean Healy and his company, Sand Dollar Investing Partners, LLC. The order, among other things, permanently bars Healy from engaging in any commodity-related activity. It also orders Healy to pay disgorgement in the amount of $14,637,000 and an additional penalty in that same amount, $14,637,000.27 On April 26, 2011, the court granted the CFTC’s motion for summary judgment against Shalese Healy as a relief defendant and ordered her to pay disgorgement in the amount of $14,637,000.28

INVESTOR DEPOSITS	PRISON SENTENCE	RESTITUTION
>$14,000,000	188 MONTHS	$16,773,995