U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20511 / March 25, 2008
United States v. IDPM Group, Inc., Craig H. Reinhard and Debra R. Bzik, 06-997 (E.D. Pa.)
Craig H. Reinhard Sentenced to More Than 12 Years in Prison for Mail Fraud and Making False Statements to the SEC for Ponzi Scheme That Preyed Mostly Upon Elderly Investors
The Securities and Exchange Commission ("Commission") announced today that, in a judgment entered on March 20, 2008, Craig H. Reinhard (Reinhard) was sentenced in the United States District Court for the Eastern District of Pennsylvania to 151 months (12 years and 7 months) in prison for mail fraud and 60 months (5 years) in prison for making false statements to the Commission. These sentences will run concurrently. This term of imprisonment will be followed by 3 years of supervised release. Reinhard also has been ordered to pay $3,305,023 in restitution to the aggrieved investors. The Court revoked Reinhard's bail and placed him in immediate custody to begin serving his prison sentence. Reinhard was the owner of the IDPM Group, Inc. (IDPM), a business formerly located in Allentown, Pennsylvania. IDPM was primarily a benefit counseling service and insurance agency.
Reinhard and his co-defendant Debra R. Bzik, who is scheduled to be sentenced in April, pled guilty to an information from the United States Attorney for the Eastern District of Pennsylvania, which charged that, from at least 1994 through February of 2006, Reinhard and Bzik participated in a scheme to defraud investors, many of them elderly, of approximately $3,661,248 by selling the investors fraudulent certificates of deposit. According to the information, investors were told that the certificates of deposit were insured by the Federal Deposit Insurance Corporation, when in fact, they were not. Reinhard and Bzik used money from sales to new investors to pay interest and principal to earlier investors, to fund operating expenses for their business, for salaries for themselves, for personal expenses, and to pay commissions to others who helped to sell these certificates.
On March 6, 2006, the Commission obtained a preliminary injunction halting this alleged ongoing Ponzi scheme being conducted by Reinhard and Bzik. SEC v. Craig H. Reinhard, Debra R. Bzik, and The IDPM Group, Inc., Civil Action No. 06-997-CMR (E.D. Pa). The Commission's complaint charged IDPM, Reinhard and Bzik with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Without admitting or denying the allegations of the complaint, Reinhard, Bzik and IDPM consented to the entry of an order preliminarily enjoining them from engaging in the violations set forth above, partially freezing their assets, granting expedited discovery, prohibiting the alteration or destruction of documents, and ordering an accounting.
The Commission's proceeding remains pending, but has been stayed pending the disposition of the criminal proceedings. In addition to the emergency relief obtained, the Commission's complaint seeks from each defendant a permanent injunction, disgorgement with prejudgment interest, and a civil penalty.
Additional information may be found at Litigation Release No. 19591.