CHICAGO –(ENEWSPF)–May 7, 2015. A Chicago investment adviser was sentenced today to 36 months imprisonment for fraudulently using new investor funds, including funds from elderly investors, to pay off old investors, leading to a loss of almost $1 million. The defendant, JOSEPH HENNESSY, 54, of Western Springs, was also ordered to pay restitution in the amount of $645,900 to the victims of the fraud and was sentenced to three years of supervision after his release by U.S. District Court Judge Harry D. Leinenweber. Hennessy was ordered to report to the Federal Bureau of Prisons on June 23, 2015. Hennessy pled guilty on December 16, 2014 to one count of wire fraud.
Hennessy operated Resource Planning Group, Inc., a registered investment adviser with the U.S. Securities and Exchange Commission, in Chicago. Hennessy also formed and operated the Midwest Opportunity Fund, a private equity fund that targeted for purchase and investment small to medium-sized companies based in the Midwest.
“What you did involved a massive abuse of trust that needs to be punished,” stated Judge Leinenweber when imposing the sentence, “People relied on you.”
According to court records, between May 2009 and February 2010, Hennessy solicited investors to invest in the Midwest Opportunity Fund, and offered a high interest rate between 10% to 15% per year with a short maturity date of between two and six months. Hennessy falsely represented to the investors that their funds would be used to invest in small to medium-sized companies. However, Hennessy used the new investor funds to pay off old investors in the Midwest Opportunity Fund. Hennessy also misappropriated funds from the accounts of two elderly investors and forged their names on wire transfer forms without their authorizations. Hennessy used the elderly investors’ funds to repay existing investors in the Midwest Opportunity Fund.
“Defendant Joseph Hennessy owed a fiduciary duty to his clients. He was an investment adviser tasked with managing his clients’ money. However, when defendant went into debt with the Midwest Opportunity Fund, he used client money like a personal piggybank, selling promissory notes and transferring funds out of new client accounts to pay off old debtors,” argued Assistant United States Attorney Sunil Harjani in the government’s sentencing memorandum.
The case was prosecuted by Assistant U.S. Attorney Sunil Harjani.
The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation. The Chicago office of the U.S. Securities and Exchange Commission provided assistance with the investigation.