A former investment advisor from Forest Hills was sentenced to 3 to 9 years in prison Friday for running a multi-million dollar securities fraud scheme that saw over 50 investors, many of whom were elderly, lose their life savings.
Dean Mustaphalli was convicted in Queens County State Supreme court on Friday, Oct. 16, after submitting a guilty plea to 22 felony charges, including grand larceny and securities fraud, New York State Attorney General Letitia James said. As part of his sentencing, Mustaphalli paid $260,000 in criminal restitution and signed confessions of judgment in favor of the victims of his scheme, totaling more than $2.3 million dollars.
According to the AG, Mustaphalli will also be unable to engage in any business related to the issuance or sale of securities in New York.
Mustaphalli, who was the owner of Mustaphalli Capital Partners Fund, began the scheme in 2011, targeting mostly elderly, immigrant women, according to the authorities.
The banker moved $7.1 million of 20 investors money that year into his own hedge fund without his investors consent, according to the charges. A little over a year later, his hedge fund had lost 92 percent of its original value. By 2014, the fund only had $200,000 remaining, the AG said.
In 2015, Mustaphalli transferred the savings of 30 additional clients into his hedge fund – accounting for a $5 million boost. By December 2015, Mustaphalli’s investments had lost 80 percent of their value, according to James.
After the losses, Mustaphalli allegedly used shell companies that he created to divert $100,000 of the remaining hedge fund balance to himself, leaving his investors with, at most, 20 percent of their original investment. To cover his tracks, Mustaphalli created fake email accounts for his clients, a good portion of whom had never used a computer, according to the AG. He also forged his clients initials on documents that would boost his credibility, James said.
While under investigation from 2016 until 2017, Mustaphilli continued to attempt to defraud new victims, according to the authorities. In May 2018, the investor was arrested on a 99-count criminal indictment.
He pleaded guilty to 25 counts in December 2019.