A prosecutor in the case against Aaron Olson has recommended that Olson pay more than $22.8 million in restitution to those he defrauded.
Olson was sentenced in April to five years in federal prison, with an additional three years of supervised release and a $400 special assessment, after pleading guilty to four counts of tax fraud. Olson’s plea deal also stipulated that he pay restitution to those who lost money.
Assistant US Attorney Mark Zuckerman filed a memorandum with the United States District Court on Wednesday, laying out the reasons as to why Olson should pay back all of the money he stole through a Ponzi scheme.
“From 2007 through 2012, every dime the defendant collected from his victims was the product of his fraud, deception, and deceit,” read the memorandum. “Not only did the defendant withhold material and valuable information from his victims about how poorly their ‘investments’ were performing, he affirmatively lied to them by producing bogus earning statements that showed fictitious earnings and he falsely reassured them that their principals were safe and that he was investing their money in low risk, high yield vehicles.”
Restitution of $22.8 million represents the aggregate loss suffered by all of Olson’s victims who are asserting their rights. Overall, it is reported that Olson swindled people out of about $24.7 million, but some people chose to waive their rights to restitution.
In the memorandum, Zuckerman said he anticipates the defense will argue that restitution should be reduced by $4 million to account for investment losses and a one-percent fee Olson was entitled to charge for his services. Zuckerman also expects the defense to argue that the victims of Olson’s scheme assumed a risk loss when they gave him the money to invest, meaning that Olson should not be liable to reimburse them for poorly-performing investments.
“The United States counters that but for the defendant’s fraudulent acts the victims would not have suffered losses and it objects to any reduction of the restitution the defendant owes,” said Zuckerman, in the memorandum.
Olson’s attorney, Inga L. Parsons, has until Oct. 19 to file a brief sharing the defense’s case. By Oct. 21, any responses to the two briefs, as well as a joint submission containing stipulated facts and factual disputes are due, per court order. The final restitution hearing is scheduled for Oct. 31.
Zuckerman said that from January 2010 through February 2012, Olson received over $51.9 million from would-be investors, but he only invested just over $27.1 million, with the remaining money used for other purposes. Those purposes, as presumed by Zuckerman, included paying purported “earnings” to some of his investors, covering withdrawals of principals, supporting his own lifestyle, and other similar uses.
Furthermore, Zuckerman said Olson had lost money in every year that he operated the scheme, losing $10.6 million from 2007 to 2012. Of those years, the only times that Olson reported investment gains were 2008 and 2012. In 2011 alone, Olson reportedly lost over $10.2 million.
“From nearly the beginning of his scheme the defendant knew he was losing money at a staggering rate through day trading,” read the statement. “At no time from 2007 to 2012 when he was ostensibly accepting other people’s money to invest did the defendant tell his victims that his total net investment portfolio had a negative balance.”
Nicholas Handy can be reached at 924-7172 ext. 235 or nhandy@ledgertranscript.com. He is also on Twitter @nhandyMLT.