NEW HAVEN — Garrett L. “Denny” Denniston, 62, formerly of the Sandy Hook section of Newtown, has waived his right to indictment and pleaded guilty on February 14 before US District Judge Janet Bond Arterton to one count of wire fraud stemming from his operation of a multimillion-dollar investment fraud scheme.
“This defendant operated an investment fraud scheme by representing to investors that he ran a successful investment business, and could offer them a special ‘friends and family’ deal investing in companies for a guaranteed return of their investment plus a high rate of interest,” US Attorney David Fein said in a statement.
Through the bogus investment scheme, Mr Denniston defrauded more than 50 victims out of a total of more than $2.5 million. Individual investment amounts ranged from a few thousand dollars to nearly $500,000.
According to a federal criminal complaint against Mr Denniston, he defrauded one unidentified Sandy Hook couple out of $300,000, another Sandy Hook couple out of $400,000, and a Sherman resident out of $207,000.
Mr Denniston, who had known the victims for decades, allegedly told them that their money would be placed into high-yield investments, but he actually diverted their money for his own use and use by his family members.
Mr Denniston concealed his fraudulent activities by preparing fake legal documents and forging signatures on those documents. At times, he also used one investor’s funds to repay other investors.
Mr Denniston has been incarcerated since his arrest last September 19.
Newtown real estate records indicate that on December 6, 2011, a house and property at 20 Russett Road in Sandy Hook, which was owned by Garrett L. and Donna L. Denniston, was transferred to Nationstar Mortgage of Dallas, Texas.
Judge Arterton has scheduled sentencing for June 11, at which time Mr Denniston faces a maximum term of imprisonment of 20 years.
“I commend the FBI and the Greenwich Police Department for shutting down this scheme, and I urge the investing public to be extremely skeptical of any promises of risk-free investments and guaranteed returns,” Mr Fein said.
According to court documents and statements made in court, from 2005 to 2012, Mr Denniston defrauded individuals through a Connecticut company called Consensus One, LLC, by holding himself out to potential investors as operating a successful investment business specializing in mergers and acquisitions, and by convincing individuals to make investments in phony stock options or other similarly nonexistent investments.
During the scheme, Mr Denniston told investors that their money would be used to invest in one of the companies that he or his investment business owned and, specifically, that their money would be used to purchase stock options, or promissory notes, convertible into the company’s stock at a substantial discount to the value of the stock on the date of conversion, according to Mr Fein.
Mr Denniston also told investors that the companies were on the verge of being sold or had already been sold in deals that were closing on an accelerated schedule. He further indicated that an investment was refundable if the deal did not close, and that he and his company would guarantee the investments, so that the investments were risk-free.
Mr Denniston also told people that the investment was being offered to them as part of a “friends and family” deal pursuant to which he had access to a limited pool of stock options that would yield a guaranteed return on investment, according to Mr Fein.
In reality, Mr Denniston did not invest his victims’ funds in stock options or in any other legitimate investments. Rather, he spent the money on his own personal and business expenses, as well as for other unauthorized uses.
Mr Denniston used some money for gifts to family members, and spent additional amounts on airfare, hotels, restaurants, country club memberships, golf and ski outings, mortgage and rent payments, cable and telephone bills, furniture, home renovation costs, and other personal living expenses.
Mr Fein said that citizens are encouraged to report any financial fraud schemes by calling, toll free, 855-236-9740, or by sending an e-mail to firstname.lastname@example.org.