MIAMI – A federal district judge in Ft. Lauderdale has sentenced David J. Varrone, 56, of Weston, Florida, to 108 months’ imprisonment for his role in organizing an elaborate credit and investment Ponzi scheme through his company, The Credit Engineers, Inc.
In addition, Judge Raag Singhal ordered Varrone to pay over $3,5 million in restitution and entered a forfeiture judgment on Varrone’s Weston home and a bank account containing COVID-19 relief funds that Varrone had fraudulently obtained.
Varrone previously pled guilty to conspiracy to commit wire fraud. From 2018 through 2021, Varrone and his company offered individuals with good credit a short-term investment program tied to a purported hedge fund that guaranteed investment returns and fully repaid investments in 36 months or less. To obtain funds, Varrone helped victims apply for the high interest, short term loans and the victims “leased” the proceeds to The Credit Engineers and Varrone.
In fact, there was no hedge fund and the victims’ funds were never invested as promised. Instead, the proceeds were used to enrich Varrone and to repay earlier victims. The scheme funneled over $6.4 million of misappropriated victims’ funds into Varrone’s accounts.
Additionally, Varrone fraudulently applied for and received approximately $650,000 in CARES Act, Economic Injury Disaster Relief Loans from the U.S. Small Business Administration. The loans were intended to keep small businesses afloat and retain employees during the COVID-19 pandemic period.
David J. Varrone’s wife, Sherry D. Varrone, also pled guilty to her role in the conspiracy in case number 22-cr-60196. She is scheduled for sentencing on April 3, in Ft. Lauderdale before U.S. District Judge William P. Dimitrouleas.
U.S. Attorney Markenzy Lapointe for the Southern District of Florida and Commissioner Russell C. Weigel III of the Florida Office of Financial Regulation (OFR), Bureau of Financial Investigations (BFI), Miami Region, made the announcement.
OFR-BFI Miami investigated the case, with assistance from the Small Business Administration, Office of Inspector General (SBA-OIG) and the U.S. Secret Service (USSS), Miami Field Office. Assistant U.S. Attorney Trevor Jones prosecuted the case. Assistant U.S. Attorney Emily Stone is handling asset forfeiture.
In March 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted. It was designed to provide emergency financial assistance to the millions of Americans suffering the economic effects caused by the COVID-19 pandemic. Among other sources of relief, the CARES Act authorized and provided funding to the SBA to provide Economic Injury Disaster Loans (“EIDLs”) to eligible small businesses, including sole proprietorships and independent contractors, experiencing substantial financial disruptions due to the COVID-19 pandemic to allow them to meet financial obligations and operating expenses that could otherwise have been met had the disaster not occurred. EIDL applications were submitted directly to the SBA via the SBA’s on-line application website, and the applications were processed and the loans funded for qualifying applicants directly by the SBA.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
On September 15, 2022, the Attorney General selected the Southern District of Florida’s U.S. Attorney’s Office to head one of three national COVID-19 Fraud Strike Force Teams. The Department of Justice established the Strike Force to enhance existing efforts to combat and prevent COVID-19 related financial fraud. For more information on the department’s response to the pandemic, please click here.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov under case number 22-cr-60197.