He not only used a classic Ponzi scheme to raise more than $115 million from unsuspecting investors. He also, in the darkest days of the COVID-19 pandemic, promised to provide the U.S. government with desperately needed respiratory masks and other personal-protective equipment that he had no way of securing.
Now a 20-year prison sentence for a former Rochester, New York-based broker-dealer is bringing an end to prosecutors' case against one of the masterminds of what the FBI has deemed the biggest Ponzi scheme ever perpetrated in western New York.
Forty-two-year-old
Parris and Santillo both stood accused of committing mail fraud to bilk more than 1,000 ordinary investors out of tens of millions of dollars between January 2011 and June 2018. Investigators said the pair would promise to invest clients' money in companies that were secretly controlled by Parris and Santillo. Few of the companies, including First Nationle Solution, Percipience Global Corporation, Middlebury Development and NexMedical Solutions, were legitimate business concerns. None was profitable. But that didn't matter. The money raised for investors was never intended for business purposes, anyway.
As in all classic Ponzi schemes, funds from new investors were used to pay returns to people who had entrusted their money to Parris and Santillo earlier. Some of the money also went toward purchases of existing advisory firms or brokerages, bringing clients who had invested with those businesses into the scheme. All told, Parris and Santillo acquired 15 such firms across Tennessee, California, Florida, South Carolina, Texas, Pennsylvania and Maryland.
Parris and Santillo also spent investors' money on the trappings of a proper business — keeping clerical and other staff on the payroll and maintaining offices throughout the country.
And they paid for lavish living. Santillo was particularly flamboyant. According to
In the end, the two were able to raise roughly $115.5 million from unwitting investors. The victims included a married couple from Victor, New York, who put nearly $222,000 into First Nationle Solution and Middlebury Development. By the time the scheme collapsed in early 2018, Parris and Santillo had managed to pay back roughly $44.8 million to investors. That left about $70.7 million still owed.
According to the
Santillo might not have flaunted his ill-gotten gains quite so openly as Perry had. But his involvement in a scam involving N95 respiratory masks and other personal-protective equipment that became highly sought after during the pandemic ultimately brought him a longer prison sentence.
In addition, Santillo pleaded guilty to wire-fraud charges for promising to sell masks and other equipment to the U.S. government and at least eight private companies that he in fact had no way of securing. From February to April 2020, Santillo used Encore Health Group, a company he owned and operated, to approach the Department of Veterans Affairs and various medical supply companies with offers to procure then-scarce personal protective equipment. He claimed his supplies were coming from overseas when, in fact, they were non-existent.
In the end, Parris was able to obtain $7.4 million in upfront payments for masks and other equipment and $65 million worth of orders. His proceeds from that scheme exceeded $6.2 million.
"This defendant exploited the unprecedented situation presented by the pandemic," U.S. Attorney for the District of Columbia Matthew M. Graves said in an official statement. "Fraud like this, playing off fears during a pandemic, merits a significant sentence, as the court imposed today."
Parris and Santillo's first steps toward their Ponzi scheme came with their formation in 2007 of a business called Lucian Development. Lucian was used to raise money for another company, City Capital Corp. When the operator of that business, Ephren Taylor, told his business partners in July 2007 that all that money had been lost, they stepped in with an offer to buy City Capital. The amount of debt they took on for the purchase far exceeded the value of the company's assets. Rather than explain the situation to investors, Parris and Santillo continued to raise money.
"Mr. Parris' conduct was deceptive and manipulative, ultimately defrauding consumers out of hundreds of millions of dollars," said Michael Stansbury, acting agent in charge in the FBI's Buffalo office, in a statement. "This example of blatant greed is an affront to every hard-working taxpayer."
