TODAY'S PAPER
32° Good Evening
32° Good Evening
BusinessTechnology

Former Melville CEO sentenced to 32 months in scheme to bilk investors

U.S. Attorney Geoffrey Berman said in a statement

U.S. Attorney Geoffrey Berman said in a statement from the Department of Justice about Kenneth Orlean, the former head of Digital Donation Technologies Inc.: "This kind of predatory fraud will not be tolerated." Credit: AP/Jose Luis Magana

The former chief executive of a Melville company that sought to build fundraising platforms for nonprofits has been sentenced to 32 months in prison and ordered to forfeit or return almost $3 million in connection with a scheme to bilk investors.

Keith Orlean, 62, of Hauppauge, who headed Digital Donations Technologies Inc., was sentenced Wednesday by Judge Vernon S. Broderick in U.S. District Court in Manhattan, five months after pleading guilty to one count of securities fraud and one count of securities fraud conspiracy. 

“Keith Orlean and his co-conspirators obtained more than $2 million by taking advantage of innocent investors — many of them elderly — through blatant lies," U.S. Attorney Geoffrey Berman said in a statement from the Department of Justice. "This kind of predatory fraud will not be tolerated.”

Officials announced the arrest of Orlean and two Brooklyn men who took part in the investment scheme in May 2018. Under the original charges, each faced up to 25 years in prison.

At that time, Orlean's attorney, Robert C. Gottlieb, said the government's case was based in part on a phone wiretap of one of Orlean's co-defendants.

Orlean later hired Jeffrey Lichtman, who represented drug lord Joaquin "El Chapo" Guzman, as his attorney.

Lichtman said Thursday he was pleased with the penalty imposed on Orlean, which was "significantly lower" than the sentencing guidelines.

Orlean could serve 14 to 24 months in prison with good behavior, Lichtman said.

In July, Guzman was sentenced to life in prison plus 30 years and ordered to forfeit $12.6 billion for leading a drug cartel.

A phone call left Thursday on the voicemail of Digital Donations was not immediately returned.

Vladimir Ziskind and Kevin Weinzoff, the Brooklyn men who pleaded guilty to participating in the scam, are awaiting sentencing.

Orlean, Ziskind or Weinzoff would call potential investors under the pseudonym "Mike Palmer" to offer a bogus time-sensitive investment opportunity, according to the scheme described in court papers.

The trio offered their victims stock in several companies, including Digital Donations.

One of the defendants told an investor that Orlean was considering a private sale of Digital Donations at a valuation of more than $1.5 billion.

In 2017, the last year's financial results Digital Donations filed with the Securities and Exchange Commission, the company posted a net loss of $401,870 on gross revenues of $143,342.

One wiretap captured Ziskind describing his strategy for pitching the stocks: You ram it down their … throat."

The FBI estimated that since April 2014, the trio solicited more than $2 million in stock purchases from about 57 people, many of them elderly.

More news