Another Ponzi Scheme unmasked

[sullivan]

iPod scam nets prison term

BY JAY WEAVER, MIAMI HERALD

A local businessman who orchestrated a $50 million iPod investment scam on the University of Miami campus must spend 17 years in prison, a federal judge ruled Friday.

Andres Leonel Pimstein, who pleaded guilty to a dozen wire-fraud counts in December, must also turn over 5,540 of the Apple devices and a Fidelity investment account totaling $138,522, U.S. District Judge Adalberto Jordan said.

That's chump change for at least 146 of the scheme's investors, who suffered losses totaling about $40 million, according to the U.S. attorney's office in Miami.

The UM alum's sales pitch dazzled dozens of investors -- academics, colleagues and friends -- with promises of annual returns of up to 36 percent.

His business venture: purchasing iPods at wholesale prices and reselling them to a department store chain in Pimstein's native Chile. The chain, named Ripley, was supposedly going to buy the iPods from him at above-market rates.

But there was one slight problem: The UM business school graduate was running a Ponzi scheme. Such scams involve an organizer who takes money from initial investors and pays them back with money from new investors. It can survive for only so long because there's no actual business generating income.

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