A North Bethesda man who operated a Ponzi scheme that bilked investors out of $28.6 million over four years was sentenced to 13 years in prison Tuesday for his role in the fraud.
Garfield Taylor, 56, of the 6100 block of Rosemont Circle, pleaded guilty to securities fraud in March 2014 in the U.S. District Court of the District of Columbia. Chief District Judge Richard W. Robert on Tuesday also ordered Taylor to pay $28.6 million in restitution as well as forfeit any of the proceeds he generated from the scheme.
The U.S. Attorney’s Office and FBI said Taylor convinced investors to provide him with money starting in September 2006. Over time, the investments he made didn’t generate enough profit to pay off the interest he promised investors, so he started to pay off the interest with funds from new investors. The scheme collapsed in September 2010 as investors began to ask Taylor to return their principal investments, which he couldn’t provide, according to the FBI.
“Garfield Taylor masterminded a Ponzi scheme to bilk local investors out of over $28 million,” Acting U.S. Attorney Vincent Cohen said in a statement. “When his scheme collapsed, his lies left the families and charities who believed in his empty promises holding the bag. This 13-year prison sentence is a reflection of the seriousness of financial crimes and our dedication to vigorous prosecution of securities fraud.”
In one case, Taylor convinced the Washington, D.C., nonprofit, The Hillcrest Children’s Center, to invest $6 million with him in late 2008 and early 2009 and promised the nonprofit a 20 percent annual rate of return. By July 2009, authorities say, Taylor stopped making interest payments to Hillcrest and their investment principal “plummeted from approximately $6 million to $200.”
Federal investigators also discovered that during the time Taylor operated the scheme he withdrew more than $2.5 million in funds for his personal use, “even as those entities suffered overwhelming trading losses,” according to court documents.
Taylor’s attorney, in a document filed shortly before the sentencing, argued that Taylor was running legitimate businesses that suffered “tremendous” trading losses due to market volatility rather than misconduct by Taylor. The attorney, asked that the court withdraw Taylor's guilty plea.
Taylor used two companies—Garfield Taylor Inc. and Gibraltar Asset Management Group—to court investors. According to court documents, the companies engaged in two primary businesses: buying and selling securities and renovating homes.
Over the four years that Taylor operated the Ponzi scheme, authorities say he never used the trading strategy he described to investors and either lost money or made minimal profits far below the amount of money he promised to investors. In April 2010, for example, he used half of a $425,000 investment to pay principal owed to earlier investors, rather than invest it as he had promised, the FBI said.
The $28.6 million represents the amount of principal owed to Garfield’s investors, according to federal authorities.
