St. James fund manager pleads guilty to Ponzi scheme, prosecutors say

A St. James investment fund manager has pleaded guilty to running a 10-year, $17.9 million Ponzi scheme that cheated scores of investors before it unraveled when Wall Street collapsed, the U.S. attorney for Long Island said Wednesday.

James M. Peister, 62, will have to repay his victims almost $9.7 million and forfeit $17.9 million, including his "lavish estate" and his Hummer sport utility vehicle, both bought with clients' funds, authorities said.

He pleaded guilty to securities fraud Monday in U.S. District Court in Central Islip and faces up to 20 years in prison and up to $5 million in fines when he is sentenced March 6, authorities said.

Peister and his attorney could not be reached Wednesday night.

FBI investigators said Peister had cheated at least 74 investors between January 2000 and June 2009 by convincing them to place more than $17 million in funds that he created: Northstar International Group Inc., North American Globex Group and North American Globex Fund.

Peister promised to buy stocks and other investments but instead used the money to pay for personal and business expenses and to pay off investors who wanted their money back, federal officials said.

He exaggerated the worth of his funds in financial statements and marketing material to investors and auditors, a deception that led clients to think their money was doing well and to continue business with him, authorities said.

Then Wall Street collapsed in September 2008 and investors all over wanted their money, authorities said.

"For nearly a decade, rather than make sound investment decisions as he had promised, James Peister fleeced dozens of investors and used their money to fund his own lavish lifestyle," said Loretta Lynch, the U.S. attorney for the Eastern District of New York, which includes Long Island, Brooklyn and Staten Island, and President Barack Obama's nominee to be the next U.S. attorney general. "When the financial crises struck in 2008 and his investor pool dried up, Peister's carefully woven web of lies and deceit began to untangle and his scheme was revealed."

Peister was arrested in June in an investigation done with the help of the U.S. Securities Exchange Commission and U.S. Commodity Futures Trading Commission, Lynch said.

His Hummer was seized and he was barred from getting rent on property he bought with clients' funds, officials said.