Longtime scheme brought in millions of dollars, Ellis admits

Jim Ellis’ days of expensive lunches at Capital Grille are over. The accused Ponzi schemer admitted to his fraud today, as he pleaded guilty in a U.S. District Court in Miami.

Exposed as a crook and a con man who orchestrated a Ponzi Scheme, which defrauded many local Wilton Manors residents out of millions, indicted businessman James “Jim” Ellis withdrew his previously entered plea of not guilty, and entered a guilty plea before a U.S. District Court Judge, the Honorable Judge Kathleen Williams.

Ellis pled guilty to one count of conspiracy to commit mail and wire fraud, which could result in five years imprisonment, followed up by three years probation. He is also subject to a quarter of a million dollars in fines. His sentencing date is set for April 11, 2013. It is expected that the U.S. Attorney’s office may ask for reduced penalties, based on Ellis’ early admission of guilt and future cooperation in the trial against co-defendant George Elia, now set for early March.

Ellis is hardly out of the woods yet. Not insignificantly, the plea agreement leaves open whether the prosecutors can enhance the penalties due to both the “sophistication” level of the crime and the amount of monies wrongfully procured under the scheme. The final decision will be up to the court.

The scheme exposed early on by SFGN’s 2012 investigation revealed that Ellis was a front and decoy for Elia, enticing Wilton Station residents with promises of riches and fortune in exchange for their investments. Courting prospective targets at local gay bars and in lavish parties at the condo complex, Ellis repeatedly proffered to others that he himself had invested his own money and inheritance as part of the lure. In fact, prosecutors charging Ellis revealed he had no inheritances, and was simply acting fraudulently as a front for Elia.

According to court documents, here’s the breakdown of what Ellis admitted to:

  1. Jim Ellis conspired with George Elia to defraud investors.
  2. Around 2006, Ellis gave Elia $24,000. Soon, Elia would be paying Ellis back from the invested amount, and from principal investments made by people Ellis helped recruit into the scheme.
  3. While Ellis promised investors he had invested $100,000 with Elia and was made to trust the “daytrader,” banks accounts confirm this transaction never occurred.
  4. Ellis told investors he’d received returns on his investment as high as 60 percent. Bank records confirm this never happened.
  5. Ellis’ involvement in Elia’s company front ranged from cashing checks on the latter’s behalf to signing documents which would put him in charge in case Elia passed.
  6. Ellis could sign off himself on the expensive lunches at Capital Grille that he and Elia took potential investors to.
  7. Ellis received investments to Elia’s company front and deposited them himself.
  8. Bank records show Ellis has received about $2.6 million from Elia, which he admitted broke down to about $23,000 a month.
  9. Elia paid Ellis’ mortgages.

One of the victims who’s been very vocal about the whole ordeal in the last year, and who’s been heading a civil lawsuit with more than a dozen other victims, is Rick Khun. He hopes the trial against Elia results in full restitution to all the victims. The government has been seizing whatever assets of his that they could. In fact, court records reveal one $95,000 forfeiture was filed this week.

“The guilty plea speak volumes in itself,” Khun said. “I’m gratified that justice is being done.”

The most interesting legal development of the case unfolded on Jan. 29 in a unique motion filed by the U.S. attorney. Expecting that Elia’s attorneys will seek to peremptorily exclude gay jurors, since so many of his victims were members of the LGBT community, they filed a motion to restrict the defense’s right to do so.

“Simply put,” U.S. prosecutor H. Ron Davison wrote in his legal argument, “sexual orientation should be treated like race, gender and ethnicity for purposes of voir dire,” the process of picking jurors. As far as the government is concerned, he argued, “George Elia was an equal opportunity con man,” targeting his victims, regardless of race, ethnicity, gender, or sexual orientation. His motion is designed to request the judge deny a possible defense strategy to peremptorily strike gay jurors.

His memorandum concluded:  “No potential juror should be presumed unqualified for the important task of serving on a jury based on his or her sexual orientation, and the Court should prevent discrimination on the basis of perceived orientation during the jury selection process.”

For Jim Ellis, though, there won’t be any jurors to persuade or parties at local bars to host prospective investors anymore. He is only facing time in a federal penitentiary, though typically sentencing does not occur until some time after the change of plea date, often not until the co-operating party has testified against his co-conspirator.