Kenneth Kenitzer, 70, was convicted of one count of wire fraud in connection with the scam.
Beginning in 2006, Kenitzer and partner Anthony Vassallo ran Equity Investments Management & Trading (EIMT). Vassallo claimed he developed computer software that enabled him to make profits of about 36% per year. Investors were told the strategy had worked for years, but court documents show Vassallo's strategy lost money overall.
Kenitzer was the primary point of contact for investors, and he was aware EIMT never made money and learned that Vassallo was lying, according to United States Attorney Benjamin B. Wagner.
The scheme began to unravel in late 2008, and investors started demanding their money back, leading Vassallo and his intermediaries to engage in stalling tactics, Wagner said.
More than 300 people invested at least $83 million to the scam, with more than $55 million returned to investors. Nearly $17 million was paid out to prop up the Ponzi scheme, with a net loss to investors totaling more than $40 million, court records show.
"While Kenitzer wasn't the primary salesman of EIMT, his administration of the money and of some sub-funds was a crucial part of keeping the scheme running as long as it did," Wagner said.