Conn. Man Gets 25 Years For Bilking Investors

Feb. 27—HARTFORD — The Judd Road mansion in Easton, complete with tennis courts, a swimming pool, patio sculptures and more — gone to foreclosure.

The high-performance Farnbacher Loles Porsche racing operation — lost to bankruptcy.

The nearly $27 million turned over by 250 investors like St. Barbara Greek Orthodox Church in Orange; the Rev. Peter Orfanakos, its pastor; Nelson Nicholson, a Milford businessman and Herman Solomon, an engineer — spent.

And Gregory Loles, the 55-year-old, self-proclaimed financial whiz who masterminded all this — locked up for 25 years, only to be handed a $26,652,072 bill to repay when he gets out of prison.

"You are the most sinister defendant I have ever sentenced for this category of crime," U.S. District Judge Alvin W. Thompson told Loles Wednesday while incarcerating him on charges of mail, wire and securities fraud and money laundering. "Your victims were among the most vulnerable — elderly living on fixed income or in ill health. They were not nameless, faceless strangers or casual acquaintances. They were people you knew well … and you projected yourself as the person who could be leaned on … assuring them their money was safe with you."

What Loles did was spend their money on a lavish lifestyle that included adding on to the Easton mansion, sending his children to private schools here and overseas, and racing cars.

"He lived quite well for 10 years on other people's money," Assistant U.S. Attorney Michael McGarry charged.

And he tore apart a close-knit Greek community.

"Individuals stopped going to St. Barbara," McGarry said. "They were embarrassed, humiliated. He crushed their spirits, ruined their lives."

"The psychological and financial loss rained down on our community is incalculable," added Greg Stamos, an Ansonia lawyer who represents St. Barbara and is also a parishioner. "It's reflected in the cracks in our sidewalks that need repair. It's reflected in our students to whom we can only provide a minutia of the financial assistance they need for their higher education. It's reflected in the small pensions we can only provide to the widows of two former priests. It's reflected every time we make a mortgage payment."

He said after five years of dealing with this, Wednesday was a day the St. Barbara community looked forward to as a way of "closing this chapter."

For nearly a decade, beginning in 2001, Loles, who graduated from Purdue University with an engineering degree, represented himself as an investment adviser. He told people he operated Apeiron Capital Management Inc., whose registration was canceled in 1998. He used his Greek descent to become heavily involved in St. Barbara Church, many of whose parishioners have Naugatuck Valley ties. He sat on their boards, placed advertisements in their bulletins and preyed on his new friends.

"He cultivated friendships and groups," said Solomon, one of the victims who consulted Loles in the hopes of building a scholarship fund at his university. "He looked for soft spots and assessed weaknesses."

Sometimes those soft spots were terminally ill acquaintances hoping to leave money for their children or grandchildren. One was a woman whose husband recently died.

McGarry said Loles not only got his hands on the proceeds of the man's insurance policy, but also convinced the widow to take out a second mortgage and turn the money over to him.

"He looked people in the face, held their hands in hospitals, sat with them in their kitchens … and said 'don't worry, your money is safe,' " the prosecutor said. "He got the dollars. All the dollars. He got every single dollar they had."

Loles told them he was investing in arbitrage bonds paying a safe 7.75 percent and issued by such stalwart companies as General Electric, Travelers and Applied Materials. There were no such bonds. He provided them with detailed monthly records, interest statements and tax forms — all just figments of a devious imagination. When pressed, he could provide small checks.

"This went on for years, and years and years," McGarry said. "Accordingly, I think he should be incarcerated for years and years and years."

But Jeremiah Donovan, a former federal prosecutor serving as Loles' lawyer, maintained a long sentence would serve no one any good. He said it would cost the taxpayers $30,000 a year to incarcerate Loles and another $20,000 in taxes from earnings Loles could make on the outside.

"As a taxpayer, I don't want to spend $50,000 to keep him locked up," Donovan told the judge.

Donovan suggested a sentence of no more than five or 10 years in prison. Already, Loles has spent the past four years behind bars, being detained without bond.

Loles, a graying, solidly built 6-footer, stood up, turned around and addressed the victims who attended his sentencing. Looking directly at them, calling some by name, he professed love for them before begging for forgiveness while constantly pausing to fight back tears. He asked two to come and visit him in Rhode Island, where he has been held.

"I know a lot of you have love for me," he said. "I hope one day you can forgive me."

He told them, "There were no words to explain what happened," but said he hoped his acts "going forward will show it doesn't end today. I will do everything in my power to try to pay you back."

He talked about the importance of being able to confess his sins to a Greek Orthodox priest at the Wyatt detention center in Rhode Island Monday morning.

"It was wonderful," he said. "I feel I'm OK with God. I confessed and repented."

And "then you came in here Monday afternoon and committed perjury," Thompson said.

The judge referred to Loles' testimony Monday that a $14 investment from a family in Greece was actually his cut of profits they made together in the Greek stock market.

"The defendant's own words and documentary evidence in front of me are sufficient to prove he committed perjury in multiple ways," Thompson said.

Meanwhile, Donovan said he intends to appeal the sentence imposed.

mmayko@ctpost.com, 203-330-6286

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