Beruflich Dokumente
Kultur Dokumente
DISTRICT OF CONNECTICUT
STATE OF CONNECTICUT :
:
: December 14, 2009
:
COUNTY OF NEW HAVEN : FILED UNDER SEAL
AFFIDAVIT
1. I am a Special Agent with the Federal Bureau of Investigation (FBI), where I have
been employed for the past 12 years. I am currently assigned to a white collar crime squad in
New Haven, Connecticut. I previously served in the New York division of the FBI, FBI
Headquarters in Washington D.C., and the Denver, Colorado division of the FBI. Throughout
my career, I have conducted and participated in physical surveillance, the execution of search
warrants, debriefings and interviews of cooperating witnesses, and reviews of documents and
evidence. Through my training, education, and experience, I have become familiar with a
variety of white collar fraud schemes and methods used to entice victims for such schemes.
charging GREGORY P. LOLES with a scheme to defraud in violation of Title 18, United States
and involvement in the investigation; information obtained by other Agents and investigators
involved in this matter; as well as other information gathered during the course of this
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investigation. This affidavit is submitted for the limited purposes described above. Accordingly,
it does not include all of the information gathered in regard to this investigation, but rather
contains only that information necessary to establish probable cause for the requested complaint.
INVESTIGATION BACKGROUND
4. This case involves the investigation of GREGORY P. LOLES, born July 27,
1959, residing at 451 Judd Road, Easton, Connecticut 06612. LOLES is the owner of a company
car service dealership named FARNBACHER LOLES in Danbury, Connecticut. LOLES also
Greek Orthodox Church in Orange, Connecticut (the “Church”) and served on the board of the
Church’s Endowment Fund. The evidence adduced to date establishes probable cause to believe
and I do believe that, beginning in approximately November of 2001, and continuing to the
present, LOLES engaged in a scheme to defraud and to obtain the money and property of
multiple investors. I have spoken with several victims of this scheme, members of the church,
other fact witnesses, and LOLES himself during the course of this investigation. In my interview
the Church, that he did not invest the money they entrusted to him as represented and that he
used the victim’s funds for, among other things, fraudulent interest payments and for his own
employed by A.G. Edwards in Hamden, Connecticut as a broker. LOLES did not like being
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compensated based strictly on commission, as he preferred a fee-based earning structure.
LOLES eventually left A.G. Edwards and started his own investment advisory company named
Church. LOLES was later elected to serve on the board of the church’s Endowment Fund. The
Endowment Fund held a significant portion of the Church’s funds and the money in the fund was
intended to be managed in order to financially benefit the church in whatever manner the board
decided. Examples of benefits the Endowment Fund provided to the Church community
included scholarships, charitable acts and contributions, and community outreach services. As a
member of the board, LOLES used his expertise as a stock broker and his company APEIRON to
purchase and sell equity securities on behalf of the Church’s Endowment Fund and was to do so
only after the board collectively decided what securities to buy and/or sell. After a period of
time, LOLES was given the authority to “trade” on behalf of the Endowment fund, and began to
execute trades using the Church’s money purportedly for the benefit of the Church. LOLES
represented to the Church that through his trading activity, he began to make the Church
Endowment Fund money. Word spread throughout the Church community about LOLES’
parishioners desired to reap the same investment benefits for themselves. Additionally, at some
point after he began managing the Church’s funds, LOLES represented to the Endowment Fund
Board and other members of the Church that he could achieve and represented that he was
achieving a steady rate of return through the investment in “Bonds” in which the principle would
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be safe and the bonds would pay a steady return of approximately 7% per annum, including
the Church, invested approximately $100,000, with LOLES based on materially false and
fraudulent pretenses, representations, and promises. Their funds were purportedly invested in
bonds that paid a steady return, including the bond known as Knightsbridge Holding ARB, when
in truth and in fact the bonds, as represented, did not exist. Additional false and fraudulent
misrepresenting the expected return from the bond funds, falsely representing the existence and
holding of various bond instruments including Knightsbridge Holding ARB, and falsely
representing that the rate of return on Knightsbridge Holding ARB bonds would be
approximately 7.5% annual return; when in truth and in fact, he had not achieved such results,
and had used the investment principal to falsely create the appearance of the consistent
investment returns that he was representing. By extending monies to LOLES and his funds
based on the materially false and fraudulent pretenses, representations, and promises, Investor-1
was defrauded. According to LOLES and confirmed by Citi-bank, there was “no money left.”
Knightsbridge Holding ARB of approximately 7.5%. The rate of return later falsely grew to
what Investor-1 believed was 7.75%. By approximately the fall of 2009, Investor-1 believed he
held 100 shares ($100,000) of Knightsbridge Holdings ARB at purportedly a 7.75% annualized
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rate of return. Sometime after October 28, 2009, Investor-1 received a check in the mail from
believed was the interest on his investment in Knightsbridge Holdings ARB. The check was
transmitted using Citi-Bank Online Bill Payment Operations, San Antonio, Texas 78245-9015.
Investor-1 deposited this check into his account believing it was an interest payment on his 100
shares of Knightsbridge Holding ARB bond. I spoke with an account supervisor at Citi Online
Bill Payment Operations who advised me the check was caused to be mailed after an online
request is made by their customer. Online bill payment checks are mailed from their office in
San Antonio, Texas. Investor-1 informed me that he did receive the check by U.S. Mail and that
he believed at the time that it was his interest payment on 100 shares of Knightsbridge ARB
Bonds. Based on my investigation, I have concluded that this payment, as well as other interest
payments like this one, was a lulling payment intended to further the scheme by causing
Investor-1 to believe his money was safely invested and that the promised interest rate was being
generated by the principle provided to LOLES. I therefore have concluded that the interstate
wires and U.S. Mails or common commercial carriers were used in furtherance of the scheme to
defraud Investor -1 and others. According to LOLES and confirmed by Citi-bank, there was “no
money left.”
the Church, invested approximately $1 million with LOLES that were purportedly invested in
bonds that paid a steady return, including a bond known as Knightsbridge Holding ARB, and did
so based on materially false and fraudulent pretenses, representations, and promises. Those false
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misrepresenting the expected return from the bond funds, falsely representing the existence and
holding of various bond instruments including Knightsbridge Holding ARB, and falsely
representing that the rate of return on Knightsbridge Holding ARB bonds would be
approximately 7.75% annual return, when in truth and in fact, the bonds did not exist, he had not
achieved such results, and he had used investment principal to falsely create the appearance of
the consistent investment returns that he was representing. By extending monies to LOLES and
his funds based on the materially false and fraudulent pretenses, representations, and promises,
Investor-2 was defrauded. Investor-2 also received monthly lulling payments that led him to
believe his money was safely invested and that the promised interest rate was being generated by
the principle provided to LOLES. According to LOLES and confirmed by Citi-bank, there was
based on materially false and fraudulent pretenses, representations, and promises with LOLES
that were purportedly invested in bonds that paid a steady return, including a bond known as
Knightsbridge Holding ARB, based on materially false and fraudulent pretenses, representations,
and promises. Those false and fraudulent pretenses, representations, and promises included
LOLES materially misrepresenting the expected return from the bond funds, falsely representing
the existence and holding of various bond instruments including Knightsbridge Holding ARB,
and falsely representing that the rate of return on Knightsbridge Holding ARB bonds would be
7.75% annual return, when in truth and in fact, the bonds did not exist, he had not achieved such
results, and he had used investment principal to falsely create the appearance of the consistent
investment returns. By extending monies to LOLES and his funds based on the materially false
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and fraudulent pretenses, representations, and promises, Investor-3 was defrauded.
11. Beginning in approximately mid-2009, Investor-3 noticed that the regular wire
transfer payments to his bank on the interest in his total investment with LOLES through
APEIRON CAPITAL MANAGEMENT INC. were late. On October 29, 2009, at 1:02 pm,
2009, LOLES responded by stating, “Wires have been hitting from yesterday. Check in the
morning and let me know. Best Regards, Greg.” The investor’s e-mail address reflects the fact
that it is a web based e-mail operated by a company located outside the district of Connecticut,
and thus I have concluded that the interstate wires were used to further the scheme by LOLES
During that interview, LOLES was shown a statement that he prepared documenting investment
holdings purportedly held by the Church. Similar documents were prepared by LOLES for
holdings they purportedly held with LOLES. During this interview, LOLES advised me that no
investor, including the Church, Investor-1, Investor-2, or Investor-3, actually held a bond at
Knightsbridge Holdings ARB. LOLES explained to me that he created false statements for
investors using a software program on his computer and provided it to investors. LOLES
advised me that the Church investors did not know they were “underwater,” and that there were
no individual accounts and no bonds generating the expected and promised returns.
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13. Additionally, my investigation revealed that there is no Knightsbridge Holding
ARB bond as represented, nor do the holdings of the other bonds as listed on the statements
exist.
furtherance of and in execution of the scheme to defraud, including using an on-line banking
system to transmit and cause to be transmitted wire transfers of funds to victims purportedly as
interest payments and to generate checks sent via the U.S. Mails as interest payments, when in
truth and in fact the funds were not invested and were not generating interest as represented.
15. Additionally, my investigation revealed that LOLES was also using a portion of
the invested funds for his own personal use, including diverting a portion of the funds to his car
racing business, operated and doing business as Farnbacher-Loles and Farnbacher-Loles Motor
16. Based on the above information, I respectfully submit that there is probable cause
to believe and I do believe that LOLES engaged in a scheme or artifice to defraud in violation of
18 U.S.C. §§ 1341 and 1343. Therefore, I would respectfully request that the attached Criminal
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Request to Seal This Affidavit
that the disclosure of this affidavit at this time will jeopardize the government’s ongoing
investigation in the District of Connecticut and elsewhere. Accordingly, it is requested that this
_________________________
Matthew J. McPhillips
Special Agent, FBI
___________________________________
MARK R. KRAVITZ
UNITED STATES DISTRICT JUDGE
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