W. Roxbury couple charged with multimillion-dollar Ponzi scheme
A West Roxbury man pleaded not guilty in Suffolk Superior Court today to charges that he and his wife ran a multimillion-dollar Ponzi scheme from above their ice cream parlor on Centre Street in West Roxbury, and used the money to gamble, take exotic vacations, and pay his mistress’s rent.
Steven Palladino, 55, who has more than a dozen theft-related convictions on his record, was charged with four counts of larceny over $250, three counts of falsifying corporate books, one count of uttering, and three counts of loansharking. He is also charged as a common and notorious thief, which would lengthen his sentence if he is convicted.
His wife, Lori Palladino, 52, is to be arraigned next month on the same charges, though she will not be charged as a common and notorious thief.
Clerk Magistrate Gary Wilson set Steven Palladino’s bail at $250,000 cash, over the objections of Palladino’s lawyers, who described their client as a family man with deep ties to his community and a history of charitable donations.
Walter Prince, one of Palladino’s lawyers, said that his client has already paid off all his investors, and that no one has actually lost any money. His client is completely innocent, said Prince.
Prosecutor Benjamin Goldberger, however, said that the investigation is still ongoing, and that more charges are likely. He said that officials were concerned that the Palladinos were preparing to liquidate their assets and flee the state.
If Palladino makes bail, he will be required to wear a GPS, and will not be allowed to travel out of Massachusetts without permission.
Through their company Viking Financial Group Inc., founded in 2007, the Palladinos allegedly borrowed money from investors who thought the funds would be used to provide high-interest loans. But instead of loaning out the money and using the interest to pay back the investors, the Palladinos spent the money on themselves, prosecutors said.
Court documents say Steven Palladino gambled at a number of venues, doing so much business at Caesar’s Atlantic City that the casino began flying him and his guests from Boston to Atlantic City in a private jet. Hundreds of thousands of dollars were transferred to the casinos.
The Palladinos also spent “significant sums” on vacations, cars, education expenses for their children, gifts and rent for Steven Palladino’s mistress, Celtics tickets and real estate, including a lot on Mount Vernon Street in West Roxbury where they are building a home.
The Palladinos’ 28-year-old son was also involved in running the company, according to court documents, but has not been charged.
A spokeswoman for the Suffolk district attorney’s office said officials are not yet releasing a specific amount that the Palladinos are accused of stealing, saying only that it was “multimillions.”
At the end of 2011, according to court documents, Viking Financial had nearly $2 million worth of fake loans.
Steven Palladino also allegedly used $350,000 of investors’ funds to satisfy a condition of his probation after a 2007 conviction of defrauding an elderly relative, prosecutors said.
The couple allegedly kept the scheme going by using the money new clients invested to pay back previous clients and entering false loans in their corporate accounting books to make them appear balanced, prosecutors said.
When the couple actually did loan money, prosecutors alleged, three of the loans given exceeded the maximum 20 percent interest rate allowed under state law. Two loans charged 60 percent interest and one charged 200 percent.