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Long IslandCrime

Former financial adviser pleads guilty to running Ponzi scheme

Steven Pagartanis leaves his arraignment at Suffolk County

Steven Pagartanis leaves his arraignment at Suffolk County Court in Central Islip on May 30. Credit: Newsday/Thomas A. Ferrara

A former Long Island financial adviser accused of operating a Ponzi scheme and stealing millions of dollars from clients pleaded guilty to one count of conspiracy to commit mail and wire fraud Monday in federal court in Central Islip.

A plea deal agreement between the U.S. Attorney’s Office for the Eastern District of New York and Steven Pagartanis, 59, of East Setauket, calls for the defendant to spend 15 years in prison, U.S. District Court Judge Joseph F. Bianco said before Pagartanis entered his guilty plea.

The deal also requires Pagartanis to pay at least $3.5 million in restitution to his victims after pleading guilty to one count of conspiracy to commit mail and wire fraud. Pagartanis is scheduled to return to court for sentencing on April 12.

Some of Pagartanis’ victims glared at the defendant through much of the hearing and applauded as it ended. Elaine Bruno of Holbrook said she attended Monday’s hearing for her sister Janice Gucwa of Florida, who she said lost more than $250,000 in Pagartanis’ Ponzi scheme.

“He stole her life savings,” Bruno said.

Nicole Gentzel and her brother Ron Hulsen attended the hearing with their 84-year-old mother, Hope Dragone of Patchogue, who was a victim of Pagartanis' scheme. They said she has struggled with health problems because of the stress caused by Pagartanis’ deceit. 

“This has really taken a toll,” Gentzel said.

A nine-count indictment unsealed in July that charged Pagartanis with securities fraud, and mail and wire fraud conspiracies said he scammed millions of dollars from 17 victims, mostly elderly women from Long Island. One victim lost more than $3 million, according to the indictment, while another lost $2.5 million.

“Pagartanis perpetrated his fraud scheme against elderly investors who could least afford to lose their life savings,” stated U.S. Attorney Richard P. Donoghue. “Protecting older Americans from financial predators like the defendant is a priority of the Department of Justice.” 

The indictment said Pagartanis told victims that he was investing their money in a publicly traded Canadian company called Genesis Land Development and that they would earn a fixed annual return of between 4.5 percent and 8 percent. He provided clients with company literature he had taken from the internet, the indictment said.

Instead of investing the money, he used it to repay previous investors, and for personal expenses and luxury items such as jewelry, airline tickets, massages and cigars, according to the indictment.

Suffolk County District Attorney Timothy Sini's office arrested Pagartanis in May in connection with the same scheme and he has been charged with two counts of first-degree grand larceny and two counts of second-degree grand larceny. Pagartanis is scheduled to return to county court in March. 

Pagartanis did not express remorse or apologize to any of his victims, but some said they are glad he will finally be held accountable.

“I went up to him before the hearing and said, ‘You’re not such a big man after all, are you?’” Bruno said.

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