Trial set to begin for South Florida trio accused of $80M Ponzi scheme

Paula McMahon

Paula McMahonContact ReporterSun Sentinel

Investors poured more than $80 million into what sounded like a great South Florida enterprise — “virtual concierge” machines or kiosks dispensing services at hotels, sports venues and casinos.

But federal prosecutors say the venture was a massive fraud, a Ponzi scheme that lured in victims with promises of hefty profits the masterminds knew would never be delivered. Investigators say it operated from 2011 to 2014.

Jury selection begins Tuesday in the trial of the three main suspects charged with perpetrating the fraud: Joseph Signore, 51, and his soon-to-be ex-wife Laura Grande-Signore, 41, of suburban Palm Beach Gardens, and Paul Schumack, 57, of Coconut Creek.

All three have pleaded not guilty to the 34-count indictment, which includes charges of fraud, conspiracy and money-laundering offenses. The trial, presided over by Senior U.S. District Judge Daniel T.K. Hurley in federal court in West Palm Beach, is expected to take more than a month.

A fourth defendant, Craig Hipp, 54, formerly of Port St. Lucie, went to trial separately earlier this year. He was convicted of fraud charges and is serving seven years in federal prison. He is appealing his conviction and sentence.

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Federal prosecutors, and the court-appointed receiver who is trying to recoup the victims’ losses, say the Signores and Schumack operated companies that received $80.7 million from people who thought they were investing in 22,500 “virtual concierge” machines or kiosks.

The kiosks were supposed to offer various services at different locations. Hotel guests would be able to print out coupons for local attractions, fans could order food to be delivered to their seats at sporting venues, and casino patrons could use them to buy tickets for card games.

Investors were told that advertising and credit card transaction fees would generate profits for them.

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According to court records filed in the criminal case, fewer than 500 kiosks were placed at fewer than 50 locations and they made very little money.

Prosecutors say the defendants fraudulently used money from new investors to make payments to earlier investors to make it look like profits were being generated, the hallmark of a Ponzi scheme.

Authorities say that close to $50 million appears to have been paid out in those fake profit payments but they are still trying to determine the amount of the full loss, a process made difficult by tens of thousands of pages of records involving thousands of cash and credit card transactions made by investors and company officials.

More than 1,800 individuals and organizations from all over the U.S. invested in the venture..

The Signores and Schumack transferred millions of dollars to their personal accounts from the companies, which included JCS Enterprises and My Gee Bo, in Jupiter, and TBTI in Boca Raton, according to court records.

Financial experts who analyzed the accounts wrote in court records that the Signores and Schumack used millions of dollars from investors to pay for luxuries for themselves.

According to the accountants’ report:

The Signores received more than $1.2 million in payroll and other payments as well as withdrawing about $430,000 in cash from company accounts. They also used investor money to buy 13 one-ounce gold bars for $25,000; spent more than $60,000 on custom upgrades on a $26,000 1986 Rolls Royce; spent tens of thousands of dollars on international travel and jewelry; and bought a 4,400-square-foot residence in Palm Beach Gardens and another plot of land in Palm Beach County for a total of $650,000.

Schumack used investor money to buy a $1.6 million, 7,400-square-foot home in Coconut Creek; to pay $720,000 for a one-year oceanfront rental; to transfer $1.2 million to another company; to invest $400,000 in a pension plan; to pay $500,000 to the IRS for his personal income taxes; and to pay tithes to his church in Boca Raton.

All three, and the convicted Hipp, have turned over their homes and other property to be sold to make good on the companies’ debts.

Grande-Signore filed for divorce earlier this year but the couple agreed to postpone the final judgment in that case until their criminal case is settled, according to court filings.

Joseph Signore’s attorney, Michael Salnick, said his client, who previously had to postpone the trial to undergo spinal surgery, is relieved the case is going to trial: “Mr. Signore is looking forward to getting this trial started and moving on with his life.”

pmcmahon@tribune.com, 954-356-4533 or Twitter @SentinelPaula

Article source: http://www.sun-sentinel.com/local/broward/parkland/fl-virtual-concierge-fraud-trial-20151009-story.html

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