By Jonathan Stempel
NEW YORK (Reuters) -A Pennsylvania man has been charged with tricking people into investing money he claimed would be used to buy thousands of automated teller machines, causing more than $400 million of investor losses, U.S. authorities said on Wednesday.
Daryl Heller, 55, of Lititz, Pennsylvania, was charged by the U.S. Department of Justice with one count of securities fraud and four counts of wire fraud. The Securities and Exchange Commission filed related civil charges.
Authorities said Heller falsely promised investors in his Prestige and WF Velocity funds they would receive 25% returns based on revenue generated by ATMs purchased by his company Paramount Management Group.
According to court papers, many of the machines didn’t exist, or were old, broken-down and stored in warehouses.
Authorities said Heller raised about $770 million from approximately 2,700 investors, many from the Amish and Mennonite communities in the Lancaster, Pennsylvania, area, between January 2017 and June 2024.
Heller allegedly used new money to make Ponzi-like payments to earlier investors, while misappropriating $185 million for other companies including two cannabis-related businesses, and personal expenses including a New Jersey beach house.
The defendant also paid millions of dollars to fund managers to recruit new investors, authorities said.
According to the indictment, after new money dried up in April 2024, Heller stopped making distributions and promised investors “a complete buyout to get everyone’s capital back,” but this never happened.
Heller was arrested on Wednesday morning in Lancaster County, the U.S. Attorney’s office in Philadelphia said.
Christopher Adams, a lawyer for Heller, said he looked forward to rebutting what he called the “false allegations and speculation” in court.
“Those portfolio managers who are desperately trying to portray themselves as victims will soon have the light shone on their actions,” Adams said in a statement.
In February, Heller filed for Chapter 11 bankruptcy protection in Camden, New Jersey.
The cases are US v Heller, U.S. District Court, Eastern District of Pennsylvania, No. 25-cr-00366; and SEC v Heller et al in the same court, No. 25-05036.
(Reporting by Jonathan Stempel in New York; Editing by Howard Goller)
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