In U.S. District Court in Central Islip last Friday, Oceanside businesswoman Laurie Schneider pleaded guilty to one of seven charges of operating a Ponzi scheme that federal prosecutors said defrauded 30 investors out of a total of $6.9 million.
Schneider was arrested in 2010, four years after she began accepting money from investors seeking to earn profits in overseas machinery and equipment deals and real estate on Long Island. According to court documents, she used two shell corporations, Janitorial Close-Out City Corp and Eager Beaver Realty LLC, to steal money from them.
“Laurie Schneider played the part of a successful entrepreneur, willing to help others invest in equipment and machinery deals as well as Long Island real estate,” said Loretta Lynch, the U.S. attorney for the Eastern District of New York. “In reality, she was a con artist, using lies and false assurances to bilk unsuspecting investors out of millions of dollars. Schneider ran a classic Ponzi scheme, using investor money for her own selfish purposes. This office is committed to vigorously investigating and prosecuting individuals who are responsible for perpetrating financial crimes on the residents of our communities.”
According to court documents, in one scheme, Schneider told three of her victims, known as John Does 1, 2 and 3, that she had a contact, John Doe 4, who had strong business ties in China and would be able to purchase industrial equipment and machinery at wholesale prices. The machinery would then be sold at marked-up prices, returning all of the investors’ money and realizing a profit of as much as 60 percent. Instead of making any actual purchases, however, Schneider used investors’ money to pay off other investors, while keeping some for herself. She later admitted to having no contact in China.
Schneider pleaded guilty to one count of wire fraud for cheating an investor out of $290,000 in October 2007, and agreed to make restitution to all the victims in an amount to be determined by U.S. District Judge Denis Hurley. She will also forfeit $1 million to the federal government.
Mark Morewitz, the investor whose fraud Schneider admitted to — John Doe 2 in the case notes — called the plea agreement “definitely significant.” “I’ve been urging [the FBI] for the past five years to put her in jail,” Morewitz emailed the Herald. “[And] 40 of my family and friends lost more than $2.2 million, which for many represented their life savings. Many of us, based on encouragement from Schneider, took out hundreds of thousands of dollars in home equity loans to invest in her fraudulent schemes.”
Morewitz, who lives in San Francisco and flew to New York for the trial, said he was introduced to Schneider in 2005. The following year she had offered him a job managing her entertainment business, he explained, and Morewitz began encouraging his family and a number of friends to invest in her shell businesses.
Other victims of Schneider’s scheme are from Westchester County; New Jersey; Philadelphia; Newport News, Va.; North Carolina; Denver; Tucson, Ariz.; Los Angeles and Germany.
“Schneider devastated my world,” said Morewitz. “Most importantly, I lost the respect and trust of my family and friends, many of whom blame me for introducing them to Laurie and losing their money. I lost all my money — was left with $280,000 in home loan debt and was forced into bankruptcy. I had to flee Brooklyn and move back to San Francisco, where I could find work. I’ve worked two jobs for the past four and a half years to continue supporting my mother and myself.”
Schneider is scheduled to be sentenced on May 23. She faces 51 to 63 months in federal prison.