William Apostelos’ sister and another former bookkeeper have agreed to plead guilty to one count each of conspiracy in the alleged $70 million Ponzi-style financial scheme that involves hundreds of potential victims, federal prosecutors said Thursday.
Also Thursday, two of Apostelos’ former clients filed a class-action lawsuit against two securities firms in an effort to recover their initial investments, worth a combined $900,000. Those clients’ attorney said up to 100 investors may be eligible to join the suit and that $6 million was improperly moved from self-directed individual retirement accounts (IRAs).
Rebekah Fairchild and Rebekah L. Riddell, who both worked in Apostelos’ office building in Springboro, were each criminally charged by bills of information filed Wednesday in Dayton’s U.S. District Court. Prosecutors said the plea deals would cap both defendants’ potential federal prison time at five years apiece.
“The United States and the defense counsel for Ms. Fairchild and Ms. Riddell have been able to negotiate resolutions to their cases, and there will be plea dates scheduled with the court shortly,” said assistant U.S. attorney Brent Tabacchi.
Efforts for comment from Fairchild’s and Riddell’s attorneys were unsuccessful.
Apostelos and his wife, Connie, are free on bond after a 27-count indictment was unsealed last year that alleged that the Springboro couple bilked nearly 500 investors out of tens of millions of dollars during at least a five-year period from 2009 to 2014. Their trial is scheduled for May 16.
Fairchild and Riddell are the first two of several other potential co-defendants to be charged besides William and Connie Apostelos. Prosecutors declined to say who else or how many other individuals will be prosecuted.
Court documents state Fairchild was a receptionist who handled accounts and banking activities and interacted directly with people who invested with Apostelos’ companies.
Fairchild allegedly caused $39,000 to be wired from one Apostelos company to an investor while knowing that the money was from another investor and not from a return on an investment, according to court documents.
Riddell was listed as an administrative assistant in Apostelos’ companies who allegedly prepared promissory notes, prepared investor statements, communicated with investors and IRA custodians and provided passwords for clients to training accounts clients thought were legitimate.
The federal class-action civil lawsuit brought by Cynthia H. Boyd and Thomas E. Flanders against the Kingdom Trust Company, Pensco Trust Company and others allege misconduct related to unregistered securities.
The suit says 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. “It certainly has been devastating for both of them.”
The suit said Apostelos directed investors to transfer their IRAs to Pensco or Kingdom, who would purchase unregistered securities sold by Apostelos in violation of Ohio law. Henderson said Apostelos was not licensed to sell unregistered securities.
Henderson said Ohio’s securities law is designed to protect investors in a poorly-regulated area of the financial industry. “The Ohio statute doesn’t really care with whether you knew there was a scheme was going on,” he said. “It doesn’t really care whether you knew — as an example — that Apostelos was or was not licensed.”
Henderson said he expects other potential victims to demand the securities firms pay them back: “Absent some increased oversight, legislation, regulation of these custodians of self-directed IRA accounts, the only way that Tom and Cindy have to hold these folks accountable — if, in fact, they did break Ohio law — is to sue them.”