Ex-Nassau Trader Sentenced To Prison For $19 Million Ponzi Scheme

MANHASSET, NY — A former Wall Street trader from Manhasset who pleaded guilty to running a Ponzi scheme that bilked investors out of $19 million has been sentenced to more than five years in prison.

Paul Rinfret, now 71, pleaded guilty in October 2019 to wire and securities fraud. He was sentenced in Manhattan federal court Tuesday to 63 months in prison, federal prosecutors said. Rinfret was also sentenced to two years of supervised release, forfeited about $20.3 million and ordered to pay back nearly $12.3 million to his victims.

Audrey Strauss, acting Manhattan U.S. attorney, said Rinfret was "brought to justice for callously lying to investors."

"Rinfret told investors his investment returns were excellent, when in fact he failed to invest investor funds as promised, generated losses when he did invest, and diverted the majority of investor funds to his personal use and to repay investors in a Ponzi-like fashion," Strauss said.

The scheme started in at least 2016 and continued into 2019, prosecutors said. Rinfret used an entity called Plandome Partners L.P. to defraud investors for his own and his family's personal gain, prosecutors said.

He told potential investors they could invest in the company by buying limited partnership interests. When pursuing them, he lied and said he would use all their investment money to trade futures contracts tied to the Standard & Poor's 500 index using a propriety trading algorithm he had created. He would charge a fee of about 25 percent of the net profits on the trades.

Six people were bilked in the scheme, prosecutors said. In one case, Rinfret said Plandome Partners traded through certain brokerage accounts, one of which didn't exist and two of which weren't even open when he claimed to be trading in the accounts, prosecutors said.

Despite telling investors their money was being invested, Rinfret only used a small amount for trading, authorities said. Most of the money was used to buy high-end items and vacation rentals, including $50,000 on a luxury Hamptons vacation rental, more than $40,000 on jewelry, and tens of thousands of dollars on an event venue for his son's engagement party.

According to court documents obtained by the Manhasset Press, Rinfret used the Plandome Partners account to pay $30,000 for an engagement party for his son. The party, held at a Manhattan restaurant, included a custom photo wall with the hashtag #RinfretAllDay.

Rinfret also used the money to pay $50,000 to rent a vacation home in Southhampton; $35,000 for custom kitchen cabinets; $170,000 on jewelry, watches and cars; about $105,000 on alcohol; about $12,000 on cigars and over $130,000 at restaurants.

Furthermore, the money Rinfret used for trading generated losses, prosecutors said. To prevent investors from trying to get their money back — and to get them to fork over even more — he lied about how their investments were growing by emailing bogus and doctored monthly account statements. The victims were also sent phony brokerage account statements.