Dimitry Vishnevetsky Sentenced to Six Years in Prison for Causing Clients to Lose $1.6 Million in Fraud Scheme

A former Chicago investment advisor was sentenced yesterday to six years in federal prison for an investment fraud scheme that swindled clients, causing them to lose more than $1.6 million. The defendant, Dimitry Vishnevetsky, pleaded guilty last August to wire fraud and bank fraud, admitting that he misappropriated funds raised from investors for his own purposes, including to pay for such expenses as mortgage and car payments, travel and vacations, restaurant bills, athletic club dues, and to make trades for himself, while using additional investor funds to make Ponzi-type payments to clients.

Vishnevetsky, 34, of Chicago, was ordered to pay $1,684,763 in restitution, nearly all of it to a half-dozen investment clients, by U.S. District Judge Ruben Castillo, who likened Vishnevetsky’s conduct to a financial storm that devastated the lives of his victims. Vishnevetsky was ordered to begin serving his sentence on May 28.

“This offense was entirely unnecessary,” the government argued at sentencing. “There was no good reason for this fraud, and the defendant, who was skilled in the world of finances, could have gotten a legitimate job. In fact, [he] obtained a bachelor’s degree in business administration and attended the University of Oxford.”

According to the court records, Vishnevetsky offered and purported to sell investments, including investments in funds which promised to trade S&P Futures, and a fund that could trade in things such as equities, futures contracts, and commodities, as well as brokerage and management services for some investors, and promissory notes, through Hodges Trading LLC and Oxford Capital LLC, which he controlled. Three purported Oxford funds existed in name only, as did the promissory notes, which Vishnevetsky described as London Interbank Offered Rate (LIBOR) adjusted notes.

Between September 2006 and March 2012, Vishnevetsky made false representations about the profitability of his prior and current trading, the use of the invested funds, the risks involved, the expected and actual returns on investments and trading, as well as false representations about the funds he purportedly traded. For example, Vishnevetsky created and provided some investors fraudulent trading results showing profits as high as 36 percent per year. In fact, any trades that Vishnevetsky actually made consistently resulted in losses, not profits.

The bank fraud conviction resulted from false statements Vishnevetsky made between 2007 and 2010 to Merrill Lynch Bank & Trust concerning his income and assets to cause the bank to issue, and later modify, two loans totaling approximately $519,500 to purchase a condominium in Chicago.

The government is being represented by Assistant U.S. Attorney Jacqueline Stern.

The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation. The Commodity Futures Trading Commission, which filed a companion civil enforcement lawsuit, assisted in the investigation.

The investigation falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit stopfraud.gov.