New York Man Accused Of Massive Ponzi Scheme Dies

April 23—Loren Holzhueter, the Watertown insurance agent under federal investigation for running a suspected Ponzi scheme, died at home Tuesday of pulmonary fibrosis, Stephen Kravit, his attorney said Thursday.

Holzhueter, 69, had been under investigation by the criminal division of the Internal Revenue Service since at least 2013. His assets were frozen this year after he was sued for securities fraud by the U.S. Securities and Exchange Commission. Authorities believed he ran a $10 million Ponzi scheme.

In an interview with the Journal Sentinel last year, Holzhueter denied any wrongdoing saying money he received were loans given to him by friends, family and customers. The money was intended to help him expand ISC Inc., the insurance agency he founded and ran.

Investigators from the IRS and SEC, however, contend the money was paid to him by people who thought they were buying investments in securities.

The IRS "investigation has revealed that Holzhueter is using his business to divert investor money he receives by check to pay for ISC's business and payroll expenses, including 'Ponzi' scheme payments in which early investors are paid with the money received from newer investors," states a 2013 affidavit by an IRS agent that was used to obtain a warrant to search Holzhueter's offices. Agents seized records and computers during that raid.

When Holzhueter's assets were frozen this year, U.S. District Court Judge James Peterson also appointed a receiver to run his business.

It is unknown whether the SEC will continue its action. In similar cases, the agency has continued lawsuits by naming the estate of the deceased party as a new defendant.

Funeral services are scheduled for Friday at St. Paul's Lutheran Church in Oconomowoc.

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