A couple who swindled investors out of more than $1 million, living a lavish lifestyle while some of their clients lost their homes, are going to prison.
James and Verna Pilon "lived a life of ease while others were being pushed out onto the streets,” U.S. District Judge Virginia Kendall said Wednesday.
James Pilon will serve 53 months in federal prison and his wife received a 78-month sentence. Together, they have been ordered to pay $967,702 in restitution.
Among the purchases they made with their ill-gotten gains was a $14,000 diamond ring, a $54,000 Cadillac SUV and a $125,000 down payment on a California residence once owned by tennis player Andre Agassi. They also used the money to pay off bankruptcy debts and to purchase restaurant meals, hotel rooms and airline tickets.
According to court records, the couple operated numerous businesses through which they sold two forms of investment, a news release issued by the U.S. Attorney's Northern District office said.
The Mortgage Acceleration Program had investors make payments that were to be invested, with proceeds used to pay off their mortgage within two years and then generate additional returns. The Private Placement Program promised high-yield returns of as much as 100 percent or more on investments within 90 days.
Neither investment program existed and the Pilons used some funds they fraudulently obtained to make Ponzi-type payments to lull some investors, while using the remaining funds for themselves, the news release said.
As a result, some investors’ mortgage payments were never made and their homes were foreclosed.
According to court records, the investigation of the Pilons, who lived in Monee at the time, began in 2005, when the Illinois Securities Department ordered them to stop selling investments in the state. The couple ignored that order and continued to solicit investment money through 2005 and 2006.
During court proceedings, Verna Pilon was identified as a member of the so-called Washitaw nation sovereign group and she repeatedly maintained the U.S. District Court had no jurisdiction over her, the news release said. Evidence showed the Pilons were acquainted with many of their victims, including some who testified the couple preyed upon their religious faith in appealing for investment funds.
James Pilon's sentence was lower than his wife's because he entered an early guilty plea and started serving his sentence on Nov. 7, 2011. Verna Pilon, 59, who has been in federal custody since 2010, pleaded guilty to the fraud scheme on the second day of trial in May after eight victims testified against her.
“The victims in this case were hard-working individuals who did not have money to spare, and indeed, many refinanced their homes in order to make an investment with the defendants,” said Gary S. Shapiro, acting U.S. Attorney for the Northern District of Illinois, who worked with the FBI on the case.
The and the Monee Police Department also assisted in the investigation.