Man Will Pay $9 Million, Serve 9 Years in Prison for Defrauding Investors

Watchung resident David Connolly was ordered to surrender nearly $10 million, in addition to paying $18,732,775 in restitution, for his part in an investment scheme that prosecutors said was a little more than a Ponzi scheme.

Connolly, 51, was charged in May 2012 with securities and mail fraud in connection with a real estate investment business. He was additionally charged with money laundering in January and entered a guilty plea to the charges.

U.S. District Judge William J. Martini ordered Connolly to serve 108 months in prison, plus pay restitution and forfeit $9,920,000 for his role in defrauding victims in an investment scheme by misusing their capital contributions and misrepresenting the performance of their investments, U.S. Attorney Paul Fishman announced. Connolly appeared in Newark federal court Tuesday morning. He must also serve three years of supervised release following imprisonment, according to Fishman.

The case stemmed from Connolly's actions between 2006 and October 2009, as he ran an investment business that took in more than $50 million from more than 200 victims, Fishman said. Prosecutors said during that time, Connolly had told investors about properties and provided details on rental income projections and conditions of the properties that were false. He assured investors their money would be held in escrow until properties were purchased, but, in fact, used funds to pay previous investors, himself and other, unrelated real estate transactions, Fishman said.

Connolly's actrions caught up to him in the summer of 2009, when he began defaulting on mortgage payments for the properties that were purchased.

U.S. Attorney Fishman said special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, led the investigation, and he thanked special agents of IRS–Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, for "important contributions." The government was represented by Assistant U.S. Attorney Charlton A. Rugg and Senior Litigation Counsel Leslie F. Schwartz, of the U.S. Attorney’s Office Criminal Division, in Newark, in the proceedings.