How a Ponzi Scheme Mastermind Made Millions Off the Most Vulnerable
A con man who ran what the FBI called “the largest Ponzi scheme ever prosecuted in western New York”, and then tried to sell the federal government nonexistent COVID-19 masks during the pandemic, has been sentenced to 20 years in prison.
“I think you are a con man, the biggest con man I have ever had to deal with in this court,” U.S. District Judge Frank Geraci Jr. told Christopher Parris, 42, at his sentencing on December 19.
Parris was convicted of defrauding over 1,000 victims who invested over $100 million as part of the scheme which involved a string of fake companies and non-existent investment opportunities.
In January 2020, after his network of phony investment businesses collapsed, Parris was arrested and charged with mail fraud and money laundering.
While he was out on pretrial release in the Ponzi scheme case, Parris embarked on another audacious scheme to defraud the federal government in a COVID-19 protective equipment scam.
As the COVID pandemic wracked the United States in early 2020 and thousands of Americans were sick and dying, Parris offered to sell scarce personal protective equipment (PPE), including 3M-brand N95 respirator masks, to the Department of Veterans Affairs (VA) and other government, state and medical entities.
In April 2020, Parris called a person he thought was a VA employee and said his company, Encore Health Group, acquired and produced PPE and ventilators, and could produce them in one to two weeks, according to court records viewed by The Daily Beast.
A spokesperson for Parris’ company told another VA employee they had access to 190 million 3M masks that were available for purchase, as well as 10,000 ventilators and 1.5 million protective face shields. (The Minnesota-based company 3M manufactures PPE.) Parris’ company was selling the masks for $7.50 a pop, while 3M-contracted companies were offering them for $0.50 each.
In an email to the VA, Parris said the masks were “on the ground” and his team was inspecting them, according to court documents.
N95 face masks being made in a factory.
Prosecutors say Parris misrepresented his ability to provide the VA with 125 million face masks and other PPE that would have totaled over $750 million.
“In fact, [Parris] had no ready access to 3M factories or 3M N95 masks or other PPE, no proven source of supply, and no track record of procuring and delivering such items,” the U.S. Attorney’s Office of the Western District of New York said in a statement.
What Parris didn’t know was that federal authorities were already suspicious. An agent from the U.S. Department of Homeland Security Investigations went undercover, pretending to be a procurement specialist with the state of Louisiana who was trying to buy masks and other medical supplies, according to court documents.
The undercover agent discovered the state of Louisiana’s Office of Homeland Security and Emergency Management had put in an order with Parris’ company for more than $7.3 million of PPE in March 2020, including 160,000 face masks, none of which arrived.
Parris was arrested in April 2020, and charged with fraud in the COVID-19 scam. Meanwhile, he was still facing charges for his earlier involvement in a Ponzi scheme that defrauded over 1,000 people.
Prosecutors say that between 2008 and 2018, Parris and his co-defendant Perry Santillo conspired to defraud their victims by falsely representing investment opportunities in a classic “Ponzi scheme.” Parris and Santillo ran an investment company called Lucian Development out of Rochester, New York. They solicited investments from older people, who entrusted Parris and Santillo with their life savings or retirement money. Instead, it was used to pay prior investors, prosecutors say.
The scheme finally collapsed in June 2018, but not before Parris and Santillo had obtained at least $115 million, according to court documents.
Santillo spent lavishly on cars, country clubs, casinos, real estate, and expensive suits, according to a complaint filed with the Securities and Exchange Commission. He threw himself a $150,000 birthday party in Las Vegas while misappropriating investor funds, the complaint says.
Santillo even commissioned a song about himself, called “King Perry: The King of Hyde,” that described him as wearing a “ten-thousand-dollar suit everywhere he rides.”
Pandemic Grifters Are Here to Stay
In October, Santillo was sentenced to 17 years in prison after pleading guilty to fraud by U.S. District Judge Frank Geraci Jr.
Two months later, on Dec. 20, the same judge found Christopher Parris guilty of conspiracy to commit mail fraud in relation to the Ponzi scheme, and wire fraud for the fraudulent sale of masks and over PPE equipment.
In emotional testimony given at Parris’ sentencing, victims of the Ponzi scheme detailed the devastating impact the scam has had on their lives. One described becoming suicidal when she learned of her financial loss, according to the Democrat and Chronicle. Others described losing over $1 million, or being forced to work well into their seventies, having lost financial security.
“How many innocent victims now can’t pay their rent or heat their homes?” one victim asked during the sentencing.
Prosecutors also slammed Parris for his COVID-19 PPE scam.
“This defendant exploited a situation like none other in our recent history,” said U. S. Attorney for the District of Columbia Matthew M. Graves after Parris’s sentencing. “Fraud like this, playing off fears during a pandemic, merits a significant sentence, as the court imposed today. This sentence should be a warning to anyone who thinks they can get away with ripping off the government or others during a crisis.”
In court, Parris’ lawyer, John Sperenza, said his client began as a successful young investment banker but was led astray when he became involved in a failing company, according to the Democrat and Chronicle. He argued that unlike his co-defendant Santillo, Parris didn’t spend lavishly, and made efforts to return some money to investors.
“There’s no getting around it that many people were severely damaged,” Sperenza said, according to the newspaper. But Parris, he went on, “was part of that sadness and wreckage.”
Prosecutors had a different take.
“It seems Parris’ multi-million-dollar Ponzi scheme to defraud investors out of their hard-earned cash was not enough, so he turned his attention to a multi-million-dollar COVID fraud scheme. There were no boundaries in Parris’ cons, and no one person was safe as long as he was lining his pockets with their money,” said Thomas M. Fattorusso, special agent in charge of IRS-CI New York, after Parris’ sentencing. “Parris will face justice; putting his scamming days behind him as he spends his time behind bars.”
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