WAKEFIELD INVESTMENT ADVISER SENTENCED TO 18 YEARS IN PRISON

BOSTON, MA - A Wakefield man was sentenced yesterday in federal court for an investment scheme that defrauded more than 400 victims out of $20 million.

United States Attorney Michael J. Sullivan and Warren Bamford, Special Agent in Charge of the FBI in New England, announced today that FRANK J. RUSSO, age 52, was sentenced by U.S. District Judge William G. Young to 18 years imprisonment, to be followed by 3 years of supervised release, and a $500,000 fine. The Court also ordered RUSSO to pay $20,000,000 in restitution and ordered forfeiture of RUSSO’s residence and other assets. RUSSO pleaded guilty to charges of investment adviser and mail fraud at a hearing that took place immediately prior to his sentencing.

The prosecutor told the Court that had the case proceeded to trial the Government’s evidence would have proven that over a period of more than 20 years, RUSSO operated two limited partnerships, Russo Associates and Eliot Partners. RUSSO represented to his victims that monies invested through these two limited partnerships would be safely invested in bonds and other investment securities and would earn significant returns. RUSSO issued quarterly summary statements to his clients that appeared to support his representations. In reality, RUSSO did not invest the monies as he promised and neither limited partnership generated any profits at all. Instead, RUSSO compensated himself with investor monies and used the fraud proceeds to fund his family’s lavish lifestyle and to acquire assets including his home in Wakefield, a timeshare at Disneyworld, and several investment properties. In addition, RUSSO made significant transfers of investor funds to a privately held California company of which he was co-founder and chief financial officer. RUSSO did not disclose these investments, which were high risk and never generated a single return, to his investors.

Approximately 70 of RUSSO’s victims were in attendance at the hearing and more than 10 made impact statements to the Court. RUSSO’s victims, many of whom have known RUSSO for decades as a friend and respected member of the community, spoke of the devastation caused to their lives by his violation of their trust. RUSSO’s victims described for the Court not only the crippling impact of their financial losses at RUSSO’s hands, but also the emotional consequences that they continue to suffer as a result of his fraudulent betrayal of their trust in him as an investment adviser.

In sentencing RUSSO, Judge Young echoed the prosecutor’s characterization of RUSSO as a predator who exploited the trust and vulnerability of friends and family who had known RUSSO from his boyhood as a star athlete from Everett, Massachusetts. Judge Young told RUSSO, “this is a fraud that cuts to the very heart of human beings’ relationship one to another.”
The case was investigated by the FBI with assistance from the United States Securities and Exchange Commission. It was prosecuted by Assistant U.S. Attorney Lori J. Holik of Sullivan’s Economic Crimes Unit.