FLORIDA – A Broward County man has been sentenced for his role in a Ponzi scheme and COVID-19 relief fraud, said the U.S. Attorney’s Office for the Southern District of Florida (USAO).
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David J. Varrone, 56, of Weston, has been sentenced by a federal district judge in Ft. Lauderdale to 108 months in federal prison for his role in organizing an elaborate credit and investment Ponzi scheme through his company, The Credit Engineers, Inc.
In addition, Judge Raag Singhal ordered Varrone to pay over $3.5 million in restitution and entered a forfeiture judgment on Varrone’s Weston home and a bank account containing COVID-19 relief funds Varrone had fraudulently obtained, the USAO said.
Varrone previously pled guilty to conspiracy to commit wire fraud.
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From 2018 through 2021, Varrone and his company offered individuals with good credit a short-term investment program tied to a purported hedge fund that guaranteed investment returns and fully repaid investments in 36 months or less.
To obtain funds, Varrone helped victims apply for the high interest, short-term loans, and the victims “leased” the proceeds to The Credit Engineers and Varrone.
In fact, there was no hedge fund, and the victims’ funds were never invested as promised, the USAO said. Instead, the proceeds were reportedly used to enrich Varrone and to repay earlier victims.
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The scheme funneled over $6.4 million of misappropriated victims’ funds into Varrone’s accounts, the USAO said.
Additionally, Varrone fraudulently applied for and received approximately $650,000 in CARES Act, Economic Injury Disaster Relief Loans from the U.S. Small Business Administration, the USAO said.
David J. Varrone’s wife, Sherry D. Varrone, also pled guilty to her role in the conspiracy in case number 22-cr-60196. She is scheduled for sentencing on April 3, in Ft. Lauderdale, before U.S. District Judge William P. Dimitrouleas.
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U.S. Attorney Markenzy Lapointe for the Southern District of Florida and Commissioner Russell C. Weigel III of the Florida Office of Financial Regulation (OFR), Bureau of Financial Investigations (BFI), Miami Region, made the announcement.
OFR-BFI Miami investigated the case, with assistance from the Small Business Administration, Office of Inspector General (SBA-OIG), and the U.S. Secret Service (USSS), Miami Field Office. Assistant U.S. Attorney Trevor Jones prosecuted the case. Assistant U.S. Attorney Emily Stone is handling asset forfeiture.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
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Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov under case number 22-cr-60197.
