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Court: Victims of ‘Bernie Madoff of Dayton’ can’t recover Ponzi scheme funds from securities firms

Victims of a Ponzi scheme run by a Springboro man will not be able to seek restitution from companies that purchased securities from the scheme operators, the Ohio Supreme Court has ruled.

A federal class-action civil lawsuit brought by Cynthia H. Boyd and Thomas E. Flanders against the Kingdom Trust Company, Pensco Trust Company and others alleged misconduct related to unregistered securities.

FROM MARCH: Those who lost in Springboro man’s $66M Ponzi scheme want money from winners

The lawsuit was brought in relation to a Ponzi scheme run by a Springboro man, William Apostelos, whom federal investigators accused of taking in $70 million during a span of at least five years.

Apostelos, 55, was sentenced to 15 years in prison and ordered to repay $32,776,576.72 to nearly 500 victims in June 2017. During his sentencing hearing, a prosecutor called Apostelos “the Bernie Madoff of Dayton, Ohio.”

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THE SENTENCING: ‘Bernie Madoff of Dayton’ ordered to serve 15 years and pay back $32M

The federal suit said Boyd, a former factory worker, lost $400,000, and that Flanders, a former law enforcement officer, lost $500,000.

“These are both folks who were working class, blue collar,” said Toby Henderson, attorney for the plaintiffs, in 2016. “It certainly has been devastating for both of them.”

EARLIER REPORTING: 2 agree to plea deals in alleged $70M Ponzi case

The suit said Apostelos directed investors to transfer their IRAs to Pensco or Kingdom, which would purchase unregistered securities sold by Apostelos in violation of Ohio law. Henderson said Apostelos was not licensed to sell unregistered securities.

The Ohio Supreme Court ruled that parties not knowingly participating in the scheme are not liable, even if they purchased illegal securities.

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