Delaware Man Charged in Large Scale Investment Fraud

PHILADELPHIA - A criminal complaint¹ has been filed against Joseph Forte, charging him with mail fraud. According to the affidavit, Forte was the sole general partner of an investment fund, which he used as a pyramid or Ponzi scheme to defraud investors of tens of millions of dollars between 1996 and 2008. According to the affidavit, Forte has admitted to raising at least $50 million in investment capital from roughly 80 investors, including a charity, a church, and a private school. Forte told investors that he was profitably trading in S&P 500 stock index futures contracts. In quarterly investment reports mailed to investors, Forte consistently claimed that his trades were profitable, reporting investment returns between 18% and 38%. In fact, according to the affidavit, Forte consistently lost money on his trades and he fabricated the numbers in the investment reports to mislead his investors. In the last 10 years, Fortes trading account suffered aggregate trading losses of $3.3 million. The affidavit alleges that Forte only deposited about half of the investors money in his trading account. Forte paid himself millions of dollars in salaries and fees, and used over $15 million of investor funds to pay other investors who made redemption requests. Despite the trading accounts actual losses, Forte was able to continue raising money from new investors by falsely reporting high return rates. According to the affidavit, Forte used the system of mailing quarterly investment reports as the primary method for misrepresenting his trade performance to individual investors. Via the most recent quarterly report mailed to investors on or about September 30, 2008, Forte reported that his fund had a value of $154,700,189, when in reality the value of the account was less than $150,000. The complaint alleges that on or about September 30, 2008, in order to execute his scheme, Forte caused to be mailed statements which falsely represented his trading activities, as well as the status of investments of individual investors.