Michael J. DaCorta, a 57-year-old man from Sarasota, Florida, recently learned that the biggest downside of cheating the IRS and running a longtime Ponzi scheme can be summed up in two specific words: "federal prison."
In October, it was announced that DaCorta had been sentenced to 23 years in federal prison. He was at the forefront of a Ponzi scheme from 2011 to 2019 by an investment company named Oasis International Group. In addition, he was also convicted of wire and mail fraud, money laundering, and filing fake income tax returns.
The Story So Far
For those unfamiliar, a Ponzi scheme is an investment fraud that pays current investors with money collected from new ones. The types of people who run these schemes, like Michael J. DaCorta, promise new investors incredible returns with little or no risk. However, the money is not invested. It's used to pay off people who had previously been tricked by the scheme, with the rest being saved for those running the operation. Ponzi schemes are notable because they have little and often no legitimate earnings.
In just eight years, it was estimated that DaCorta and his cohorts convinced at least 700 people to invest in Oasis International Group. They did so via promissory notes and similar methods. Over that period, the Ponzi scheme swindled people out of at least $80 million.
As is true with many of these situations, DaCorta used the money he stole to fund an extravagant lifestyle. Court records show that he used money from the scheme to purchase a Maserati, Range Rovers, and other expensive cars for himself and his family. He used it to fund his membership in an expensive country club. He had multiple homes, all valued at millions of dollars, throughout Florida.
He took flights on private jets to Europe and the Cayman Islands, paid for college for his family members, and more - all with money people thought they were investing in a legitimate enterprise.
To top it all off, in 2017, he claimed a negative income on his federal tax return, netting him a sizable tax refund.
In the end, this should be an important lesson for everyone. Setting aside the moral and ethical implications, Ponzi schemes, by their nature, are unsustainable. They only function for as long as you have new people coming in, and once that stops, things go south pretty quickly. Likewise, if you are going to engage in widespread criminal activities, don't lie on your income tax returns on top of it. If the IRS could help take down Al Capone, they would have no trouble dealing with a 57-year-old from Florida.
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