CINCINNATI - Investment advisor Glen Galemmo has agreed to plead guilty to federal charges of wire fraud and money laundering while admitting bilking clients out of millions of dollars.
Galemmo, whose Queen City Investment Fund was based in Walnut Hills, had been accused of running a massive Ponzi scheme, telling clients they would get returns of more than 400 percent a year.
Between 50 and 200 investors lost between $7 million and $20 million from Galemmo’s scheme, according to the plea agreement.
But, in a civil suit, more than 160 investors claim he bilked them out of as much as $300 million.
RELATED: See the bill of information against Glen Galemmo below or click here
Galemmo faces up to 40 years in prison (20 on each count) and potentially millions of dollars in fines. He also agreed to pay restitution.
Galemmo agreed to forfeit more than $1.7 million from personal investment and checking accounts, along with his office building at 2230 Park Ave., his two homes in Cincinnati and Florida and five vehicles. Some of the money and property are under the name of his wife, Kristine Galemmo.
The government said Galemmo operated his scheme from sometime before 2005 until July 2013. He invested only a small amount of the money he received from clients, using the vast majority of it for himself and his family and to pay some investors to cover up his con.
Galemmo gained the trust of investors by targeting friends, parishioners and members of his social network, investors said in court filings.
Investor John Rush told WCPO in October that he met Galemmo at Maketewah Country Club 15 years ago. Rush said Galemmo found his investors through social networking at Maketewah, St. Mary parish in Hyde Park, in the local AAU basketball community and Moeller High School.
In some cases, “investors were propositioned ... from the sidelines of their children’s athletic events,” one filing said.
Galemmo was a smooth operator, Rush said.
“I had no reason to distrust him,” said Rush. “That’s part of the genius of Glen Galemmo. He was able to present himself in a way that you could trust him.”
Rush said he started with small investments that performed well but were not outlandish.
“I was getting anywhere from 8 percent to 21 percent,” Rush said. “Things started escalating in 2009 (but) the overall market was doing well.”
Rush took confidence in Galemmo’s casual remarks about how Goldman Sachs was investing with him, or JP Morgan, or how the Securities and Exchange Commission would audit him every year. That made Rush think his money was safe.
Galemmo bought his own office building and outfitted it with 10 large computer screens "to give investors the impression he was constantly monitoring the market," the government said. He created "fictitious trading accounts from Goldman Sachs and Lightspeed Trading." That was in addition to making false statements to investors about the success of his fund via mail or email.
Galemmo's scheme also included taking short-term loans from investors and setting up fake IRA and 401K accounts in their names.
In all, he received approximately $89 million in investments and $29 million in short-term loans, the government said.
When investors sued Galemmo in August, attorney James Cummins said the scheme “could be the largest financial fraud in Ohio.”
"I heard a story where a woman had put her life savings in it," said Cummins. "She was getting a monthly draw and she lived on it along with her Social Security supplement. That monthly draw cut off a couple of weeks ago. So there are a lot of people who are hurt.”
Co-counsel Richard Wayne was asked how a fraud could go on for so many years.
"As long as he keeps on continuing to fund it and people keep on bringing in money, the merry-go-round continues to work. It's fine till it stops,” Wayne said.
Galemmo used the proceeds to pay his home mortgage, buy his office building and vacation condo, purchase vehicles for himself and family, and pay private school tuition and other personal expenses, the government said.
He also used it to operate two sports entertainment complexes, Midwest Hoops in Florence and Midwest Sportsplus in Cincinnati.
Galemmo notified investors July 17 that his business was shutting down. He and his family left their $600,000 house and moved out of state.
Galemmo's attorney, Ben Dusing, declined comment Tuesday..
A sentencing date has not been set.