A former Wellington socialite’s Ponzi scheme of at least $37 million will cost him 17.5 years in prison, a federal judge ruled Friday.
Joseph Zada’s massive investment scam victimized sports stars and firefighters alike — paying for an opulent lifestyle that included lavish parties, exotic cars, custom jewelry and mansions in Wellington and Michigan, investigators said.
Jurors in September found Zada, 57, guilty of 15 counts of mail fraud.
The long duration of Zada’s deception and the dozens of people affected were among the factors that on Friday prompted U.S. District Judge Kenneth Marra to impose a lengthy prison term.
“This is a very serious crime,” Marra said. “It caused significant harm to a lot of people.”
Zada, who divided his time between Palm Beach County and Michigan, was a fixture in South Florida’s equestrian and social circles.
Federal prosecutors said he convinced at least 45 victims to give him millions of dollars he said he was investing for them in oil and other ventures. Victims included NHL star Sergei Fedorov, Olympics star Robert Dover, a veterinarian, a jeweler, a pawnbroker and several firefighters from Palm Beach and Martin counties.
“He took people’s retirement funds. He took people’s life savings. … He took people’s equity out of (their) homes. He took money from any source,” Assistant U.S. Attorney Adrienne Rabinowitz said. “Had he not been arrested he would be doing it to this very day.”
Zada, who has maintained his innocence, plans to appeal, his attorney Richard Lubin said.
Authorities said Zada told victims he was investing their money in oil and currency trading through a top-secret board headquartered in London, England.
“In truth, he never invested their money, but instead squandered it on a lavish jet-set lifestyle, which included mansions in Florida and Michigan,” prosecutors said. “When pressed to return the investment money, Zada claimed he was awaiting a billion-dollar inheritance from a member of the royal family of Saudi Arabia, but the inheritance never materialized.”
Zada “projected an image of great wealth” and portrayed himself as a successful businessman who had connections to Saudi Arabian oil ventures and other foreign investments, prosecutors said. He used that image to lure investors, they said.
Prosecutors have revised their estimates of the amount of fraud several times during the case. When he was first charged in September 2013, they said it involved about $20 million and after trial, they said about $50 million was involved. Their most recent estimate, filed Thursday, put the amount of losses at more than $37 million over 12 years. Zada faces a restitution hearing in March to try to determine how much he owes.
“[The crime] included fraudulent promissory notes, countless false statements, individuals posing as representatives of the Saudi Royal Family, actors posing as princes and princesses, international travel for purported high-level business meetings, two years of lulling victims with the assistance of numerous attorneys in Florida and Michigan, dozens upon dozens of fraudulent settlement agreements and fraudulent Saudi documents and countless fraudulent checks,” prosecutors wrote.
Jurors rejected Zada’s defense arguments that the victims gave him their money as loans he was planning to repay with interest.
Zada’s scheme was “sophisticated and intricate,” often preying on his friends, Rabinowitz said. Zada often promised quick turnarounds and high returns on investments, but responded with delays, smaller payments or big checks that he asked people not to cash yet, she said.
“He took his time. … He lulls them along,” Rabinowitz said. “At a certain point he doesn’t have any more money to pay out.”
In a related civil lawsuit filed by the U.S. Securities and Exchange Commission, Zada has been ordered to pay $112 million in damages and penalties for selling fake investments. He appealed that judgment but the appellate court ruled against him.
When asked Friday by the judge in the criminal case if he wanted to say anything before sentencing, Zada quietly said, “No sir.” Lubin said he had advised his client not to make a statement because of the expected appeal.
Zada, wearing a prisoners jumpsuit as well as shackles around his arms and feet, smiled and waved to family members as he shuffled out of the courtroom.
Zada has been jailed since he was convicted in September and has asked the judge to grant him bond pending appeal, something prosecutors are opposing.
Zada’s attorney on Friday argued that Zada should receive a lesser sentence, between about 5 and nearly 7 years, so that he wouldn’t die in prison.
“There is good in Joe Zada, whether he has been convicted of stealing money from people or not,” Lubin said.
Supporters who wrote the judge seeking mercy for Zada said he is a good and charitable man who was extraordinarily kind and caring to his mother, who is in her 80s and has health problems.
Ann Marie Gurjack, his housekeeper for more than 20 years, wrote of his personal kindness to her. She wrote that he gave her family a generous donation to help pay for her father’s funeral and paid his lawyer to give her legal advice related to her divorce.
“Joe is very generous and charitable to so many people and many needy causes,” she wrote.
But prosecutors said Zada’s charity was funded by stealing other people’s money.
People lost more than just money to Zada, according to Palm Beach Fire-Rescue District Chief James Guyn, who said he lost about $700,000 in the Ponzi scheme. Victims on Friday told the court about foreclosures, broken marriages and the uncertain economic futures that have come in the wake of Zada’s crimes.
“I’m just glad he’s going to prison,” Guyn said.
pmcmahon@tribune.com, 954-356-4533 or Twitter @SentinelPaula
