Ma-and-Pa Ponzi Schemers Sentenced for Medical Research Tax Scam and $10M Ponzi Scheme

In the wake of master swindler and former NASDAQ chairman, Bernard Madoff’s $65-billion dollar, multi-decade, worldwide Ponzi scheme, it might seem like scams are popping up everywhere one looks..

In this context, in January, 2009, a U.S. Justice Department announcement reports that Ponzi-schemer-or-collaborator Shirley G. Graybill, 72, of North Haven, Conn., was sentenced to two years of probation — the first four months of which she must spend in home confinement. She had pleaded guilty in June, 2005 to one count of making and subscribing to a false 2002 tax return.

What happened between the June 2005 guilty plea and the three-and-a-half-year later sentencing announcement?

According to court records, the Triple Diamond Foundation was an entity created by Graybill and her husband, Dale L. Graybill, purportedly to fund cancer research, but which did not have tax-exempt status from the IRS. The Graybills controlled the Triple Diamond Foundation and its bank account. And apparently, they were quite adept at using that bank account.

During the 2002 tax year, the Graybills transferred about $350,000 from the Triple Diamond Foundation account, used those funds as income, but failed to pay federal taxes amounting to almost $93,300.

The Justice Department also reports that on October 13, 2003, Graybill filed a tax return with the IRS in which she failed to claim her actual taxable income, “when in fact she knew it to be approximately $316,519.79.”

Does anyone else find government-style reporting uniquely interesting in its departures from common sense? The Justice Department is reporting that schemer Graybill knew her taxable income was “approximately $316,519.79.”

“Approximately”?

When was the last time anyone you know has come up with a nice round number like “approximately” $316,519.79?

I know: approximately 4.7 people did roughly that just about 3.24 weeks ago.

Returning to the Graybills: they also must pay $93,293 to the Internal Revenue Service. In addition, Dale Graybill was sentenced to 48 months in prison following his conviction on one count of mail fraud stemming from his operation of a multimillion-dollar Ponzi scheme in which he solicited investments for fictitious investment programs.

Dale Graybill was also ordered to pay his victims restitution exceeding $10.6 Million dollars. And these consequences do not include what they will also owe in Connecticut state income tax.

So, leaving aside the unique style-book that the government uses, not only was the conduct of the Graybills illegal, for which they are now subject to the consequences (“the weed of crime bares bitter fruit” said The Shadow), but it also is double-plus-ungood.

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One thought on “Ma-and-Pa Ponzi Schemers Sentenced for Medical Research Tax Scam and $10M Ponzi Scheme

  1. Let’s stop blaming hedge funds and fiat creeuncirs. Those were there before the bubble and will be there after.The overwhelming, central problem is MORTGAGE FRAUD.This can be a number of things, but always is, in the end, lending more money than the property justifies, and more than the income of the buyer justifies. There are two classes here:1) Greedy flippers who knew full well of the risks and that they were lying but thought the property values would continue to rise at an obscene level. They are certainly at fault.2) Sleazy mortgage brokers who convince the naive sheeple that “everything is alright”, and then proceed to screw them worse than drunk sorority girls at homecoming. All for a fat commission check. I think the ratio of #2 to #1 is about 10:1. Of course the #1 case (Greedy flippers) often have multiple properties. The real estate agents were willing accomplices but they were tag-alongs. Transactions can’t happen without money, and as the agents are finding out right now, they can’t make money appear. As usual, the problem is lending fraud. This is why the 1933 Securities act was passed, because back then, stock brokers were as sleazy as mortgage brokers. Because of that, we didn’t have lots of grannies losing their life savings in the dot com crash. Everybody who speculated in the dot coms knew what they were getting into and how it could vanish quickly. Not so with the mortgage bubble. “So many owe so much to so few” — Winston Churchill, once upon a time.

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