Investment Advisor Sentenced To State Prison
ttorney General Spitzer today announced that Richard Muto, a former investment advisor who operated in Western New York, has been sentenced to state prison for an investment fraud that squandered the life savings of some 200 people, many of whom are seniors.
Spitzer also announced that his office has reached an agreement with SunAmerica Securities, Inc., a Phoenix, Arizona securities broker-dealer, to voluntarily contribute $1.6 million to a restitution fund for investors who were duped by Muto while he was affiliated with SunAmerica.
Muto, 47, of Smokemount Court, Las Vegas, Nevada, formerly of Lewiston, New York, pled guilty Dec. 8, 2003 to Scheme to Defraud in the First Degree and Grand Larceny in the Second Degree, class E and C felonies, respectively. He was sentenced today to serve 2-6 years in state prison by the Hon. Penny Wolfgang in New York State Supreme Court in Buffalo.
From 1996 to late 2001, approximately 200 Western New Yorkers lost more than $15 million through the purchase of promissory notes in a company called Sweetwater Development Corporation. Most of the victims are elderly, and invested their life savings. Muto was the Niagara Falls broker who sold the notes.
"This crime destroyed the finances of many New Yorkers," said Attorney General Spitzer. "My office will continue to aggressively investigate and prosecute those individuals who engage in investment scams."
When he first began to sell these fraudulent investments in late 1996, Muto was a registered representative with SunAmerica Securities. While SunAmerica had no relationship with Sweetwater Development Corp. and Muto's Sweetwater sales were made without SunAmerica's knowledge, Muto sold over $2.3 million worth of the notes to 46 investors before he was fired by SunAmerica on April 7, 1997. Although SunAmerica received none of the proceeds from these sales, it will assist Muto's victims by contributing $1.6 million to a restitution fund for defrauded investors.
The money will be distributed by the Attorney General's Office on a pro-rata basis to the investors, each of whom will receive approximately 70 percent of the money they lost. Attorney General Spitzer thanked SunAmerica for its cooperation throughout the investigation and its willingness to help provide restitution to investors.
The Attorney General cited other sources of funds that might lead to more restitution to victims. For example, Muto's co-defendant, Jeffrey Klein, pled guilty to Grand Larceny in the Second Degree on February 3, and will be sentenced June 1. As part of his plea, Klein has agreed to assign his interests in various companies to the receiver for the civil plaintiffs in a related class action brought by investors before Supreme Court Justice Joseph Makowski in Buffalo.
This case is being handled by Assistant Attorney General Diane LaVallee of the Attorney General's Criminal Prosecutions Bureau and Assistant Attorney General Dennis Rosen of the Attorney General's Buffalo Regional Office, with the assistance of Investigator Harold Frank.