Ponzi scheme suspect: $50M is gone

January 27, 2009 3:07:42 PM PST
A Philadelphia-area investment manager charged with defrauding investors out of about $50 million says the money is gone.

Joseph Forte showed for a hearing on Tuesday but arrived without a lawyer and told the judge he's broke and can't afford one.

Judge asked via court audiotapes, "Mr. Forte do you have an attorney?"

Forte answered via court audiotapes, "I met with one that I'm about to retain. I'm just trying to raise some money. I kind of got him lined up but I haven't been able to pay him yet."

Forte had nothing to say as he left the courthouse but inside he opened up to a group of reporters. He said the government's numbers are wrong but he admitted he lost upwards of 50-million dollars to a ponzi scheme.

Many of his victims live along the main line where family fortunes and at least one charitable trust have been obliterated.

"There's no question that any investor involved in this case suffered a devastating loss, especially in these economic times," said U.S. attorney Joe Khan.

Forte, a former computer salesman set himself up as an investment manager 13 years ago. He said he made a mistake early on and has been trying to make it up to his investors ever since.

He said he spent 12 hours every day at his computer at his home in Broomall making paper trades hoping to come up with a winning formula but nothing worked. Then when the economy crashed he couldn't find enough new investors to replace the others who wanted to cash out, a classic ponzi scheme.

"The affidavit charges that he was using the mails to convince investors as to his trading activity and uh paying old investors with money from new investors," Khan said.

Forte said he never set out to hurt anyone but he made a mistake and his efforts to correct it snowballed out of control. In the meantime he admitted to having paid himself millions of dollars in fees and salary.

The government will try to recover whatever it can but Forte said it's all gone. He told Action News after the hearing "I can't believe I'm here". Neither can his alleged victims, many of them close friends who trusted him with millions.

Click here to get the latest Philadelphia news and headlines from across the Delaware and Lehigh valleys.