DES MOINES, Iowa (AP) — An Iowa man who falsely marketed himself to clients as a well-connected and experienced investment manager is likely heading to prison after admitting guilt Friday in a $1.1 million Ponzi scheme.
John Francis Holtsinger of Ottumwa pleaded guilty to five counts of wire fraud and one count of tax evasion during a hearing in federal court in Des Moines. Several other counts of wire fraud, money laundering and securities violations were dropped under a plea agreement, which calls for Holtsinger to face a recommended prison term of roughly four to seven years when he is sentenced in January.
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In pleading guilty, Holtsinger acknowledged that he received more than $1.1 million from investors between 2005 and 2012 and only returned $275,000 to them during that period. He used the proceeds “for personal expenses or to make payments to investors who had given him money in earlier years,” the plea agreement states.
“The defendant essentially operated a scheme in which he solicited funds from new investors to make payments to earlier investors whose funds he had misappropriated,” it says.
Holtsinger, 52, falsely boasted about having ties to elite financial circles — that he was a member of the Chicago Mercantile Exchange and the Chicago Board of Options Exchange in the 1980s — and that he was an experienced investor. In reality, that was not true. Iowa insurance regulators last year ordered him to cease and desist after learning that he was not even licensed to do business in the state.
The state’s action came after regulators received a complaint from a construction industry worker who gave Holtsinger nearly $200,000 to invest and sought help getting his money back. Federal investigators got involved and learned that several other customers had given Holtsinger money to invest in response to his solicitations. Holtsinger invested only a fraction of their money through an online brokerage as he promised and kept the rest in accounts he controlled to pay living and other expenses.
In the plea agreement, Holtsinger admitted that he falsely told investors who were seeking to cash out that their funds had been frozen by state or federal regulators. After learning he was under investigation, he tried to convince investors to falsely tell law enforcement that they had given him money not as investments but as “interest-free loans.”
“The defendant also threatened that anyone who cooperated with law enforcement would not be repaid,” the plea agreement states.
Holtsinger acknowledged that he did not report $230,000 of income to the government in 2009 and tried to hide the money by transferring it to accounts in his mother’s name.
