BOSTON — A Peabody man was sentenced to more than two years in federal prison for his role in a multi-year fraud scheme that caused more than $6 million in losses to investors, according to the U.S. Attorney for Massachusetts’ office.
Timothy J. Allcott, 65, and Thomas D. Renison, 69, of South Glastonbury, Conn., were charged with fraudulently misleading investors by the Securities and Exchange Commission (SEC) for their roles in the scheme in January 2020. Allcott pled guilty to one count of conspiracy to commit wire fraud in July 2020, and Renison later pled guilty to one count of conspiracy to commit wire fraud and two counts of filing false tax returns in October of the same year, U.S. Attorney Rachael Rollins’ office said in a statement.
Allcott was sentenced to 30 months in prison and three years of supervised release Wednesday and ordered to pay forfeiture of $5,052,661 and restitution in the amount of $6,098,173. Renison was sentenced to four years in prison and three years of supervised release and ordered to pay forfeiture of $526,120 and restitution of $6,240,983, the statement said.
According to the statement, Renison was the owner of a privately-held investment company that purported to invest money collected from investors in businesses across New England. Between 2015 and 2018, he and Allcott “fraudulently raised and solicited funds” for the company, ARO Equity LLC, by lying to investors about how they would invest the funds, the company’s investment history, and the safety of the investments.
The pair also sought to conceal Renison’s involvement in the company after he had been barred from working in the securities industry by the SEC and regulators in Maine.
Over the course of the scheme, the company took in more than $6 million from investors, but only half of the funds were actually invested. Of the investments ARO did make, most were unsuccessful, yielding significant losses for investors, the statement said. Yet, Alcott and Renison did not inform investors about the losses, instead insisting that the investments were doing well and remained safe.
The company made regular monthly payments to earlier investors with money collected from later investors.
Allcott and Renison typically told investors the money they were putting into the company would be used to fund one of three different businesses. But, the pair instead used the funds to pay themselves exorbitant commission fees, satisfy monthly interest obligations to other investors, and invest in different, undisclosed businesses. As part of the scheme, Allcott and Renison disguised commissions being paid to Renison as loans to his wife, which enabled them to obscure his role in the company.
Renison also failed to declare more than $500,000 of commission income and pay over $150,000 in taxes.
