Former NY Trader Accused of $19.3M Ponzi Fraud

The US Securities and Exchange Commission (SEC) is accusing Paul Andrews Rinfret, Plandome LLC, and Plandome Partners LP of defrauding investors in a securities offering scam. At least five investors were allegedly collectively bilked of $19.3M. Rinfret, who is a former New York trader, is now also facing parallel criminal charges.

The SEC, in its complaint, contends that Rinfret told investors they were backing an already successful trading strategy using a proprietary algorithm that had rendered returns in the triple digits—360% in a multiyear period, supposedly—when, in reality, money was being lost on a consistent basis. Meantime, Rinfret allegedly used investors’ money to fund his extravagant lifestyle.

The investors are five individuals who thought they were buying limited partnership interests in Plandome Partners, LP, which Rinfret claimed was an investment fund that he and Plandome Partners LLC ran. These investors thought their funds would be traded in S & P futures contracts and foreign currency.

Rinfret is accused of making material misrepresentations regarding the fund’s past performance—including false claims that no money had been lost during any month since 2012 when, in fact, money was being lost each month. He also allegedly lied about current performance figures, assets under management—claiming this was $25M at one point—and his supposedly successful trading strategy.

Bogus monthly account statements were issued to investors that showed substantial trading profits that were fake while concealing losses.

The securities offering scheme is allegedly a Ponzi fraud, with Rinfret as its mastermind seeking to take investors’ money for him and his family. These investors’ funds also were used to pay redemption requests made by other investors. Of the about $11.7M of their money was put in a trading account, around $8.6M was moved back to Plandome while the rest was lost.

Investors’ remaining $18.7M was spent by Rinfret and his family, including $30K on one son’s engagement party.

It wasn’t until this year that the fraud became exposed after Rinfret had no choice but to tell investors that he couldn’t pay them redemptions because the money was gone. He allegedly admitted to the fraud, that the proprietary algorithm was a failure, and to sending out the falsified investment statements. The former NY trader even allegedly asked one of the investors for an additional $250K, claiming this would help get back the funds that everyone had lost.

With sixteen years in the securities industry beginning in 1989, Rinfret was previously a registered broker with 16 financial firms, including Seaboard Securities, Inc., which was expelled by the Financial Industry Regulatory Authority (FINRA) in 2011, Bear Stearns & Co., Prudential-Bach Securities, Rinfret Securities, Baird, Patrick, & Co,., and several others. Rinfret hasn’t been a registered broker since 2005.

According to Justice.gov, in the parallel criminal case, the U.S. Attorney’s Office for the Southern District of New York is charging Paul Rinfret with wire fraud and securities fraud.

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