BOSTON — A Peabody man already facing federal civil charges in connection with an alleged Ponzi scheme that defrauded at least 15 investors, most of them elderly, is now facing federal criminal charges.
Timothy J. Allcott, 58, and former ARO Equity LLC partner, Thomas D. Renison of South Glastonbury, Conn., were charged in the United States District Court Monday with one count of conspiracy to commit wire fraud (Allcott) and two counts of filing false tax returns (Renison). All three offenses are felonies.
If convicted on the wire fraud charge, Allcott faces a maximum sentence of 20 years in prison, a fine of not more than $250,000 or both a fine and prison, along with a period of supervised release of no more than five years.
The criminal information filing states that between 2015 and 2018, Allcott and Renison conspired to solicit and raise funds from victims to invest with their company, ARO Equity LLC.
“Allcott and Renison raised the funds (through) false and misleading statements and then misappropriated large portions of the investments — using victims’ monies for purposes different than what was disclosed to the investors,” the information stated, adding, “the object of the conspiracy was to
commit wire fraud by causing investors to invest with ARO and subsequently misappropriating the funds. The principal purpose of the conspiracy was to make money.”
Prosecutors allege that both men paid themselves “excessive and previously undisclosed commissions and fees from investor funds,” and that “they concealed payments to Renison by mischaracterizing them as loans to Renison’s wife.”
Prosecutors also called for a forfeiture of money judgment, demanding that any and all personal and real property traceable to the offenses be produced. The information states that it is seeking the amount of $5,052,661.10 from Allcott and $526,120 from Renison.
Allcott and Renison are also facing Securities and Exchange Commission (SEC) civil charges, namely fraud. In a status report filed Tuesday, prosecutors requested the court set a scheduling/status conference for mid-July. The complaint in that case was filed in January, 2020.
The SEC alleges that ARO, and Renison and Allcott, raised more than $6 million from at least 15 investors, nearly all of whom are senior citizens. Renison and Allcott provided the investors with ARO promissory notes bearing terms of three to five years with interest rates varying between 8 and 12 percent per year.
“Renison and Allcott told investors that the return on ARO Equity promissory notes was far superior to the returns on their current retirement products,” the complaint stated. “They told investors that their money would be safe with ARO Equity (as safe as being in a bank, according to Renison), that there was no downside to an investment in ARO Equity, and that ARO Equity had not experienced any losses. The defendants’ statements to investors were materially false and misleading. An investment in ARO Equity was not safe in any sense.”
According to SEC filings, by the time the fraud was discovered in early 2018, ARO had paid Renison nearly $580,000 in finders fees, while Allcott, who previously managed a billiards hall and motel, received a total salary of approximately $255,000. ARO also paid more than $100,000 to Renison’s sons.
Specific charges include fraud in the offer, purchase or sale of securities; fraudulent and deceptive conduct with respect to investment advisory clients and the sale of unregistered securities.
Allcott and Renison had also previously been charged with violating the state’s securities laws. That complaint, filed in 2018, alleged that Allcott was operating ARO out of his mobile home in Peabody, collecting more than $5.8 million of investor funds since 2015, less than $3 million of which was actually invested.
The complaint stated, “with little to no actual return on the fund’s business investments, monthly returns to ARO Equity investors are paid using funds raised from later investors, the classic hallmark of a Ponzi scheme.”
Allcott’s attorney of record in the criminal matter, Paul J. Davenport, did not respond to an email request for comment.
