POSTED: 1:30 a.m. HST, Jan 25, 2011
A Florida man was sentenced to 7 1/2 years in federal prison yesterday and ordered to pay victims of his Ponzi scheme here and on the mainland $3.4 million.
U.S. District Judge Michael Seabright ordered Patrick Rakotonanahary, 34, to surrender immediately to the U.S. Marshals Office to start serving his sentence.
Rakotonanahary, who immigrated to the U.S. when he was 2, also faces deportation back to Madagascar following his prison term.
Assistant U.S. Attorney Larry Tong said there is no indication that Rakotonanahary will be able to pay the restitution.
"The FBI hopes that this case will make the people of Hawaii take pause when offered high rates of investment returns with low risks," FBI Special Agent Thomas Simon said. "Such a thing simply does not exist in the real world."
Rakotonanahary pleaded guilty to wire fraud last year and admitted he collected $10.2 million through his company, Cyber Market Group, by promising a 6 to 10 percent weekly return from the foreign market exchange.
The scheme collected money from about 100 people from 2007 to 2009, including about 80 from Hawaii and some who relied on their shared Mormon faith with Rakotonanahary, Tong said.
Hawaii residents paid about $8 million, Tong said.
Rakotonanahary paid the bulk of the money to earlier investors, lost about $800,000 in the market exchange but spent about $1 million on himself and friends, Tong said.
While victims lost life savings, retirement accounts and money for college education, Rakotonanahary and friends incurred expenses that included $60,000 at an upscale Washington, D.C., hotel, $120,000 for three vehicles and $8,000 for concert tickets, Tong said.
Rakotonanahary told Seabright he had really intended to make money for people and his lawyer, Rustam Barbee, said his client did not have a lavish lifestyle.
But Seabright characterized Rakotonanahary as a "con artist" who lied about having experience or skills in the foreign exchange market and about having enough funds to pay the victims.
"This wasn't about altruism," the judge said. "It was about greed."