DFS Arrests Two S. Fla. Agents in $1.2 M Ponzi Scheme

May 17, 2005

Two South Florida insurance agents have been arrested in Palm Beach Gardens and Delray Beach, Fla. on first-degree felony charges of operating a Ponzi scheme which scammed an estimated $1.2 million from 31 investors. CFO Tom Gallagher announced the arrests of Thomas A. Masciarelli and Steven Petrarca, each booked on one count of Aggravated White Collar Crime and one count of Fraudulent Investment Transactions.

Agents arrested Masciarelli at his home in Palm Beach Gardens and arrested Petrarca at his business in Delray Beach. They face up to six years in prison if convicted. They were arrested by investigators from the Department of Financial Services' Division of Insurance Fraud, which Gallagher oversees.

"It never ceases to amaze me the schemes these crooks come up with," Gallagher said. "The bottom line remains, we will not put up with Florida's investors - particularly our vulnerable elderly investors - being preyed upon. The investigators who sniffed this case out deserve a lot of credit, this was heads-up work."

Last July an investigator for the Division of Agent and Agency Services began investigating Masciarelli and Petrarca for suspected failure to return unearned commissions. This led to the agent becoming suspicious the two were engaged in selling unregistered securities. Realizing the operation was active, the Division of Insurance Fraud joined the case in an effort to limit the potential for new victims.

The probe revealed the two were convincing their clients to liquidate annuity investments and invest in a bogus company that would buy and sell distressed real estate and promise returns of up to 9 percent. No real estate was ever purchased, but phony investor statements were sent to the investors, some as late as last week.

Florida investors who were victims of the scheme came from St. Petersburg, Riviera Beach, Gulfport, Greenacres, Lighthouse Point, Silver Springs, Boca Raton, Jupiter, Sarasota, North Palm Beach, Lake Worth, Gainesville and West Palm Beach.