South Florida ‘Ponzi’ schemer headed to prison after ripping off $3 million from investors

A Weston businessman has lost his freedom, his home and his bank account after admitting he ripped off about $3 million from more than 40 investors and also stole another $650,000 from a federal COVID-19 relief fund for businesses struggling in the pandemic.

David J. Varone, 56, who pleaded guilty to a wire fraud conspiracy, is now headed to prison for nine years and must repay his victims and the government, a federal judge ruled Thursday. Federal prosecutors called him a “Ponzi” schemer.

His wife, Sherry D. Varrone, who also pleaded guilty to her role in the same investment scheme, faces sentencing on April 3 before U.S. District Judge Raag Singhal.

According to court records, Varrone and his company offered investors with good credit a short-term investment linked to a “purported” hedge fund that guaranteed profitable returns over three years or less. To obtain funds, Varrone helped the investment victims apply for high-interest, short-term loans, and then the victims “leased” the proceeds to Varrone and his business, The Credit Engineers, Inc, from 2018 to 2021.

“In fact, there was no hedge fund and the victims funds were never invested as promised,” prosecutors with the U.S. Attorney’s Office said in a news release. “Instead, the proceeds were used to enrich Varrone and to repay earlier victims.”

Prosecutors said the Ponzi scheme funneled more than $6.4 million of “misappropriated” victims’ funds into Varrone’s accounts.

Separately, Varrone fraudulently applied for and received $650,000 in COVID-19 relief funds from the Small Business Administration under the CARES Act approved by Congress after the pandemic struck in March 2020. He admitted pocketing the money from the Economic Injury Disaster Relief Loans program, which was intended to keep small businesses afloat and retain employees during the pandemic.

This story was originally published March 24, 2023 at 5:42 PM.

Jay Weaver

Miami Herald

305-376-3446

Jay Weaver writes about federal crime at the crossroads of South Florida and Latin America. Since joining the Miami Herald in 1999, he’s covered the federal courts nonstop, from Elian Gonzalez’s custody battle to Alex Rodriguez’s steroid abuse. He was part of the Herald teams that won the 2001 and 2022 Pulitzer Prizes for breaking news on Elian’s seizure by federal agents and the collapse of a Surfside condo building killing 98 people. He and three Herald colleagues were 2019 Pulitzer Prize finalists for explanatory reporting on gold smuggling between South America and Miami.