PROVIDENCE – An East Greenwich resident pleaded guilty to two counts of security fraud and one count of wire fraud in Manhattan Federal Court Monday, the U.S. Attorney’s Office Southern District of New York said.
David Wagner, 54, was said to have operated a number of corporate entities as a “Ponzi-like scheme,” soliciting over $8 million from investors through materially false and misleading statements. Wagner was also said to have misappropriated a large portion of those funds, using them to pay management fees, repayment of prior investors and personal expenses, among other things.
Wagner’s companies were known collectively as Downing. The USAO said that from at least Dec. 2013 to at least or about 2017, Wagner, who was CEO of Downing, solicited investments in the company from employee-investors.
The firm purported to be a venture capital firm that would invest in health care startups, in addition to providing sales, operations and management expertise to those companies, generating returns for Downing investors. However, after making required investments of between $150,000 and $250,000, employee-investors found out that the company did not actually have access to the capital it had claimed to have and often did not have enough funds to make payroll, the USAO said.
“As he admitted in court, David Wagner conned employee-investors into handing over more than $8 million they thought would be invested in a viable operation that would generate returns,” Acting Manhattan U.S. Attorney Audrey Strauss said in a statement. “Instead, Wagner’s business was largely a sham, and employee-investor funds went to pay Wagner’s personal expenses or pay off other investors in Ponzi-like fashion. David Wagner now awaits sentencing for his crimes.”
Wagner was also said to have obtained a $400,000 loan and a $100,000 grant from the Conn. Department of Economic and Community Development for a purported relocation of a company from New York to Connecticut, but instead transferred the funds to other entities and used some of the funds to purchase a car for his daughter.
As part of his plea, Wagner agreed to forfeit $549,000 and to pay restitution of $7.9 million to victims of his criminal conduct.
A case against Wagner’s co-defendant, Marc Lawrence, is still pending.
Wagner is scheduled to be sentenced on Jan. 11, 2021.
