Netschi Gets 8 Years, 4 Months in Prison for $80 Million ATM Ponzi Scheme

Walter Netschi was sentenced to eight years and four months in prison after being convicted of running an $80 million Ponzi scheme based on phony investments in automated teller machines.

U.S. District Judge Thomas Griesa yesterday also ordered Netschi to forfeit $80 million and will later require him to pay restitution. The prison term is three months longer than Griesa imposed on Netschi’s co-defendant, Vance Moore II. Griesa said Netschi can remain free on bail while he appeals his conviction.

“I view this crime as a crime of a very serious nature,” Griesa said in federal court in New York. Netschi purported to “sell properties that simply did not exist and to take in tens of millions of dollars from those fraudulent sales,” the judge said.

Netschi, 64, was convicted Nov. 12 at a jury trial where prosecutors said he duped investors by falsely saying they were buying 4,500 ATMs in retail locations. Netschi failed to disclose that 90 percent of the ATMs never existed or were owned by third parties, prosecutors said. They said he used money from new investors to pay earlier ones and lived lavishly.

“Netschi lived well and enjoyed a privileged lifestyle,” prosecutors said April 20 in a sentencing memorandum. “He took more than $15 million from the fraud and flew around on his private jet playing golf and taking vacations with friends.”

Netschi was charged with Moore and accused of defrauding investors from 2005 to January 2008. Moore, who pleaded guilty, was sentenced Feb. 28. Netschi was convicted at trial of nine counts of wire fraud and one count of conspiracy to commit wire fraud. He previously lived in McKinney, Texas, and now lives in Hot Springs Village, Arkansas.

Requested Sentence

In court papers, prosecutors urged Griesa to sentence Netschi within the advisory guideline range of 11 years, three months to 14 years. In his sentencing memo, Netschi sought a term of three to five years. The judge said he would fashion his own sentence, noting that Netschi has already been punished.

“The fact is that he is financially ruined,” Griesa said. “Members of his family who got into this with him are financially ruined or suffered very grievous setbacks.”

Prosecutors said Netschi refuses to accept responsibility for his crimes. They said he bilked victims of more than $50 million, including a Wall Street banker who lost his life savings of $4 million and now works as a waiter in Florida.

‘Bad Judgment’

“For all the world, I wish I had never met Vance Moore and I wish I had never gotten involved in the ATM business with him,” Netschi wrote April 14 to the judge. “I am guilty of having very bad judgment and not being careful with other people’s money and just blindly trusting what Vance Moore said.”

He said he feels “tremendous and unrelenting guilt and remorse” for how his actions have damaged so many people, including investors and his family. “I wish I could turn back the clock and return all the money and go back to a time before these terrible events,” he wrote.

In court yesterday, Netschi said “I did not knowingly try to beat, cheat or cause problems to anybody. I’m so very sorry to all the people who have been hurt by this.”

The case is U.S. v. Netschi, 09-cr-00881, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: David Voreacos in New York federal court at dvoreacos@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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