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Nazareth, Pa., United States

Saturday, September 28, 2013

Former Bank Prez Charged in $10 Million Ponzi Scheme

Richard A Freer is in Northampton County jail under $10 million bail 
At one time, he was President of Lafayette Bank. But Richard A. Freer, age 67, is now in jail. He's charged as the mastermind behind a $10 million Ponzi scheme that defrauded 81 local, and mostly older, Lehigh Valley residents of $10 million over the past four years. Northampton County District Attorney John Morganelli announced the charges on Friday morning after Freer was arrested at his Palmer Township home. Based on a Grand Jury Presentment, Freer has been charged with 90 counts of theft by deception and theft by failure to make the required disposition of funds; forgery (50 counts); deceptive or fraudulent business practices (42 counts); failure to register under the Pennsylvania Securities Act (1 count); and sales and purchases in violation of the Pennsylvania  Securities Act (1 count). "He deserves to die in prison," said Morganelli. "I hope he has a long life because it's going to be spent in jail."

ADA Bill Blake handles white collar crime
Ironically, Freer succeeded James P Greer as president of Lafayette Bank when Greer was convicted of tax evasion in 1987. According to the Presentment, Freer was forced to resign his position as President in 1991. Public records reveal that he was plagued by financial problems after he left Lafayette Bank, with numerous judgments filed against him. He sold his property, after which he and wife Beverly rented a home on Tatamy Road.

There is no evidence that Freer or his wife lived a lavish lifestyle, or had a drug or gambling dependency, according to Assistant DA Bill Blake, who is also handling this prosecution.

According to the Presentment, Freer bounced from job to jab after his departure from Lafayette Bank until 2002, when AVIVA Insurance hired him. From their Bethlehem offices, Freer began offering high yield investments to customers who agreed to invest their money with him privately. He promised to place their money in a real estate investment trust or with his employer. But he instead deposited the money into his personal checking and savings accounts.

In addition to his work with AVIVA, authorities claim that Freer carried on his Ponzi scheme through Financial Services Group, Richard A Freer and Associates and Limerick Properties, LLC. But he never registered these businesses with the Department of State, as required by law. Nor has he ever registered as a broker-dealer, agent or investment adviser. In fact, he failed the examination for mutual fund and variable annuity salesmen on four separate occasions.

Freer operated by referral, visiting people at their homes. Though he did sub-let office space at 65 E. Elizabeth Avenue in Bethlehem, he had no working phone or computer. His office consisted of a desk, television and filing cabinet.

Jane Morris Annuity Led to Investigation

Morganelli began this investigation based on concerns raised by Bethlehem Attorney Nicholas E. Englesson and William Koscinski, an Allentown Certified Public Accountant. Their client, Hanover Township resident Jane Morris, age 80, had signed over an annuity to Freer worth $48,000. She invested an additional $106,000 with Freer based on his assurances that she would double her income. But last November, Morris began receiving notifications from the IRS that she owed $15,000 in taxes for prematurely cashing out the annuity. Koscinski contacted Freer, and later received a telephone message that "all necessary information was sent to the IRS and you should not contact Mr. Freer or Mrs. Morris regarding this issue any further."

Koscinski then learned that Freer had provided nothing to the IRS and that the income tax issue remained unresolved. As he continued pressing the issue, Freer ultimately paid the $15,000 in income tax from his own account. But by this time, Morris had entrusted Freer with over $400,000.

Based on this information, Morganelli began a Grand Jury investigation.

Ted and Lois Walters

According to the Grand Jury Presentment, Easton residents Ted (age 64) and Lois (age 63) Walters invested over $600,000 with Freer, beginning in 2004. He deposited this money in his personal account. When they asked for monthly annuity payments, he provided them with $5,000 per month. They also invested $10,000 with Freer as a deposit on a vacation home in Delaware. He told them their mortgage was denied, but they subsequently learned from the owners of the vacation home that there had never even been an agreement of sale. The Walters asked Freer to transfer their money to another investment broker, but he provided nothing but excuses.

The Gencarelli Family

At least ten members of this family, located in Bethlehem and Easton, entrusted  $1,450,000 to Freer for trusts that would enable their children to attend college. Freer told them he ran a big business with 19 employees, an attorney and his accountant. He promised to set up annuities with AVIVA, but instead deposited their money into his personal account. He used the money for personal expenses and to make payments to other victims of his Ponzi scheme.

The Steads

Kenneth (age 83) and Shirley (age 77) invested over $630,000 with Freer, starting in 2006. He cashed out their life insurance policies and an IRA, which went into his own personal account. Their money is gone.

Freer Claims He Has Special Investors

Detective Gerald Walsh executed a search warrant at Freer's home on May 29. At that time, Freer told Walsh he finds "special investors" for his clients, with a guaranteed  5-11%  rate of return. He acknowledged that most of his clients are between 55-75 years old. He told Walsh that his files were at his Bethlehem office, but Walsh found 82 files in an upstairs bedroom. According to Walsh, they reveal a "significant fraud" against numerous people, totaling $10 million. There were no documents indicating Freer had invested the money with legitimate investment firms or "special investors."

Freer Continues Fraud After Accounts Frozen

During the course of the investigation, Freer's bank accounts were identified and frozen in July. Freer opened up a new checking account and took $189,000 from an elderly couple. He made out a cashier's check to himself for $20,000 and used other money to make payments to some of his victims.

Morganelli Outraged

Calling this "one of the most outrageous cases I've ever seen of theft," Morganelli condemned Freer's "despicable conduct". His office is looking for additional victims. "I gotta' believe there's more people out there," stated Assistant DA Bill Blake. "Hopefully, they'll reach out as time goes on."

"We're not done yet," added Morganelli.

24 comments:

Anonymous said...

seHow horrible. How can someone do this ? Where is your conscience or sense of dignity ?

Anonymous said...

He learned from his previous employers. Banks are essentially ponzi schemes.

Anonymous said...

So Bankers are crooks. Did 2008 not teach us anything?

Anonymous said...

Crooks prey on those who allow greed to cloud their judgement.

I think a neighbor of mine may be a victim. Earlier this year I was approached by this neighbor who told me he had invested with a guy who was paying him 14% on his investment... Did I want to invest?

I told him in this economy, anyone paying 14% is probably running a Ponzi and I wasn't going to give any money to somebody that has to visit me personally to get my money and deliver the payments. I warned him to get out of it immediately, but all he could talk (brag) about was his first interest payment he received.

Last month I gathered from this neighbors comments that the payments had become intermittent and he hadn't received a check in almost 3 months this last time. He was being told the delays were "accounting errors." Trying to get his investment back, his "agent" told him his money was "locked in" and that getting back his investment would take over a year. During that time, he would not receive any interest payments because his money would be considered withdrawn, on paper. He and his wife are in their 70's.

Anonymous said...

Just hoping this guy will see prison time and the DA's office will dot their "I's" and cross their "T's", not like that recent case where the street light ponzi scheme fellows were released from State Prison.

Anonymous said...

Hope the guy does jail time and enough of his assets are seized that his family has to go out and do actual work like the rest if us. Bernie Madoff and his ilk have a special place in hell reserved. But the moral here is that if it sounds too good to be true then it probably is. It would be interesting to know what kind of statements Freer provided his clients/victims. My husband has some money with Wells Fargo & we are inundated with statements and paperwork. How did these folks not suspect for so long?

Anonymous said...

Some people are just idiots when it comes to falling for a sales pitch.

How many buy a car because some "Everybody Drives" commercial says that they overbought 120 cars and have to be cleared out at cost? How many believe they are going to get $8000 on any trade-in toward a car and that car isn't marked up $10,000 from the start?

Enough idiots for these car dealerships to keep running the same and similar bullshit ads on the radio.

Laws in place will see Freer do jail time, but no law can replace common sense, or protect the stupid from becoming a victim.

Anonymous said...

Did Freer make bail? He was reportedly seen at the Bottom Dollar store on 25th St. in Easton. No joke.

Just wondering, if he did make bail, how he made the 10% bond.

Bernie O'Hare said...

1:23, What a bundle of joy you must be.

Anonymous said...

I haven't lost my money to thieves who play others for fools. It isn't my intention to sound unsympathetic to those who did lose their money, but their own greed allowed them to get screwed.

Bernie O'Hare said...

You sound and are unsympathetic and have no idea why 82 different people invested money with Freer. Like I said, you're a real bundle of joy. No wonder you remain anonymous.

Anonymous said...

Fucking bankers and lawyers, bunch of lowlife scumbags...

Anonymous said...

A bald Northampton County deputy sheriff with fake blue eyes took a county vehicle home without permission and was involved in a car accident while bringing it back to work. Although he was not fired, as part of his discipline he was to pay the County for the over $2000 damage to the vehicle. He brags today that he has yet to pay the County a dime. Why doesn't Morganelli go after him? My guess is because he is of Sheriff Miller's rat snitches.

Anonymous said...

Thank you 12:13. Hopefully Bernie will investigate this and not sweep it under the rug.

Bernie O'Hare said...

The midnight comment is OT and comes from one of two FORMER Deputy Sheriffs who makes allegations like these that always end up being false. He always fails to ID himself. This post is about 82 people whose life savings were wiped out, not your vendetta. The 5 AM comment is from the Blog Mentor, who just demonstrated his own insensitivity to the plight of these seniors. Must be sad to be reduced to anonymous comments on a blog and to be too cowardly to sign your name and to have a blog that is so kooky that no one, including me, reads it anymore.

Anonymous said...

Bernie
It's hard to believe this could happen with all the federal regulations in place.

Anonymous said...

Just an observation re accusations from this blogger toward others. Seems somebody here didn't have much sympathy for his own victims when he made promises of money to be received years back. Where was your compassion for your own victims then, O'Hare? Maybe Freer has been on a drinking binge? How many of these victims would have trusted him with their money if he promised a return of only 4 percent instead of 11 percent?

Bernie O'Hare said...

I never enriched myself at the expense of anyone, and made amends to my ex-clients.

Norco Twink said...

Bernie can you help me with the 13th step?

Bernie O'Hare said...

Norco Twink, you slut! I thought you were in the can with Gregory?

Norco Twink said...

Gregory always made me play second fiddle to Spartacus Maximus, who incidentally is a very high maintenance & jealous drama queen who refused to spoon after coitus.

Anonymous said...

PriMerica is another Ponzi scheme where this guy Pat goes to ppl's houses and invests for him and Ron's lunch money.

Bernie O'Hare said...

Primerica appears to be a multi-level marketing gimmick, much like Mary Kay, to be honest. I am unaware of anything that is technically illegal.

Anonymous said...

"This website is a Ponzi scheme of pipe dream comments"