NEW HAVEN — Garrett L. “Denny” Denniston, 63, formerly of Sandy Hook, this week received a sentence of more than eight years in federal prison for operating a multimillion-dollar investment fraud scheme that bilked dozens of people out of funds, including some Sandy Hook residents who lost hundreds of thousands of dollars.

In US District Court on Tuesday, July 9, Judge Janet Bond Arterton gave Denniston a 97-month prison sentence to be followed by three years of probation, according to a statement from Deirdre M. Daly, Acting US Attorney for the District of Connecticut, and Kimberly K. Mertz, Special Agent in Charge of the Federal Bureau of Investigation in New Haven.

Also, Judge Arterton ordered Denniston to pay restitution in the amount of $3,048,969.

“This lengthy prison term is appropriate for an individual whose long-running scheme defrauded at least 50 victims, including close friends and family, of more than three million dollars,” said Ms Daly.

“Many investors were financially ruined. The investing public is urged to steer clear of similar ‘preferred’ investment deals, promises of risk-free investments, and guarantees of a high rate of return,” she added.

According to a federal criminal complaint against 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.

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.

“Hopefully, today’s sentence will act as a deterrent to everyone who works in the investment world,” said Ms Mertz.

“Those who handle investors’ money must always act in the best interests of clients and never to enrich themselves. Unfortunately, [Denniston’s] many victims suffered losses perhaps even more profound than those measured in dollars and cents.”

From approximately 2005 to 2012, Denniston defrauded individuals through a Connecticut company called ConsensusOne, LLC, by holding himself out to potential investors as operating a successful investment business specializing in mergers and acquisitions, and also by convincing individuals to make investments in phony stock options or other similarly nonexistent investments.

During the scheme, 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 Ms Daly.

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.

Denniston 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.

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 Ms Daly.

In reality, 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.

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, according to Ms Daly.

Through this investment scheme, Denniston defrauded at least 54 victims. Individual investment amounts ranged from a few thousand dollars to nearly $500,000.

Denniston concealed his fraudulent activities by preparing fake legal documents and forging signatures. At times, Denniston also used one investor’s funds to repay other investors.

Denniston has been imprisoned since his arrest last September 19. On February 14, he pleaded guilty to one count of wire fraud, waiving his right to indictment. Denniston had faced a possible maximum prison term of 20 years.

Newtown real estate records indicate that on December 6, 2011, a house and property on Russett Road in Sandy Hook, which was owned by Garrett L. and Donna L. Denniston, was transferred to Nationstar Mortgage of Dallas, Texas.