Illinois Investment Firm Lost Millions for Clients
Investors and creditors in the now defunct Illinois-based Commercial Mortgage and Finance (CMF) investment company are owed $63 million, of which only a fraction has been recovered.
Among its various lines of business, Rockford-based CMF made residential and commercial loans and sold certificates of deposit (CDs) and mortgage backed-investments. The FBI and state authorities have accused the onetime head of CMF, Anthony D’Agostino, of running the company like a Ponzi scheme from 1997 to 2008. He did this by selling promissory notes and certificates of participation, says a Dec. 11, 2012, FBI press release.
Investors frequently placed their retirement and life savings into CMF. However, D’Agostino didn't tell them CMF had a “negative net worth that steadily increased.” He lied to some investors, telling them the company was healthy, and their investments “were safe and secure.” He actually spent $20 million of the invested money on debts and losses, claim authorities.
After the 2008 economic crash, investors flocked to CMF to demand payment on their promissory notes. This in turn, notes a recent article in the Examiner, a local news site, drove CMF into Chapter 11 bankruptcy, All in all, CMF owed more than 1,400 creditors a total of about $63 million. Most of these creditors were people who bought private notes as investments.
CMF is now being run by a board of directors, which liquidated most of its assets. But unfortunately for investors, only about 18 percent of the losses have been recovered, according to court documents.
Last month, a federal grand jury in Rockford indicted D’Agostino on 17 counts of fraud. On December 27, D’Agostino pleaded not guilty to the charges; a status hearing is planned for Feb. 27.
When financial professionals encourage clients to invest in risky ventures that devalue their assets, that’s securities fraud. In some cases, securities or stockbroker fraud victims may be able to recover some or all of their losses. If you believe that you were a victim of a securities fraud scam, call Sokolove Law today for a free legal consultation.