CINCINNATI - One of the attorneys suing Cincinnati money manager Glen Galemmo says his alleged Ponzi scheme may represent the largest financial fraud in Ohio history, 9 On Your Side's Jason Law reports.
All together, about 200 investors claim Galemmo cheated them out of $300 million. A hearing for one of the lawsuits was held Thursday afternoon.
"The numbers that we're hearing, this could be the largest financial fraud in Ohio,” said attorney James Cummins.
Cummins and Richard Wayne represent 165 families who claim Galemmo lied to them about their investments and took their money for his personal use.
"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.”
Wayne was asked how a fraud could go on for more than 10 years, as has been alleged.
"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.
The Internal Revenue Service confirmed that it has opened a wire fraud, mail fraud and money laundering investigation involving Galemmo.
Galemmo's attorney now says the IRS has been investigating his client for months. Attorney Benjamin Dusing held a late-afternoon news conference but wouldn’t talk about specific allegations.
"Mr. Galemmo surrendered his passport to investigators several weeks ago and agreed not to transfer or liquidate any remaining assets,” Dusing said.
The U.S. Attorney's office has filed a civil forfeiture action against Galemmo seeking several bank and brokerage accounts with a combined $334,000 in cash, along with an office building valued at $811,000.
The brokerage accounts were seized pursuant to an IRS warrant July 2, according to the U.S. attorney's filing, which also seeks access to the office building at 2230 Park Ave. in East Walnut Hills as part of a continuing investigation.
The Park Avenue building is where Galemmo operated an investment advisory business under the name Queen City Investment Funds.
Galemmo notified investors July 17 that his business was shutting down, directing them to contact the IRS for additional information.
A private security guard stood in front of Galemmo's $600,000 home Wednesday as a moving truck drove away with the family belongings. It's unknown if Galemmo was there to help his family clear out of the house.
Galemmo's attorney said he is not living in his home anymore and is staying out of state with relatives.