Businessman charged with Ponzi scheme

January 23, 2009 5:47:28 PM PST
A suburban businessman is charged with running a multi-million dollar Ponzi scheme for more than two decades.Frank Castaldi of Prospect Heights appeared in federal court on Friday.

The allegations are similar to the allegations involving the widely publicized case against Bernard Madoff. He owned several businesses in Norridge.

U.S. Attorney's office says that he gave a number of statements to them indicating that he used new investors' money as well as loans to pay off old investors.

Castaldi, 55, left the federal courthouse with his attorney, accused of taking tens of millions dollars from investors. He offered no answer on Friday.

Castaldi is listed as president of several businesses including a real estate firm in Norridge. Federal investigators say he promised hundreds of investors a 10 to 15 percent return on their money by investing in his businesses.

"Mr. Castaldi would tell them, at least initially, that he would take whatever money they wanted to invest and invest it into his businesses," said Christopher Veatch, assistant U.S. attorney. "That was not the case. He was in fact using the vast money to pay others."

The government alleges many of his victims includes friends and family. According to the criminal complaint, he has been collecting investments since at least 1986 in the form of six month promissory notes. Last year, the government alleges that he issued notes for more than $68 million. Attorneys say they believe the man has no way to pay that money back and many investors may be out of luck.

"According to information provided by Mr. Castaldi, there is at least 200 to 300 investors who have not paid their principal and may be out tens of millions of dollars," said Veatch.

The U.S. Attorneys office is asking any investors who have not yet come forward to contact officials. In the meantime, Castaldi is free on $100,000 bond on Friday and also hooked up to electronic monitoring.