Federal officials shut down Guy W. Gane Jr.'s alleged Ponzi scheme in May after he took $5.7 million of his clients' life savings.
Then why is he still in business?
A Buffalo News reporter stopped at the Watermark Financial Services Group office on Sweet Home Road in Amherst last week, and there was Gane, dressed in a casual sweater, sitting before the company's switchboard.
"I'm keeping the doors open; that's about it," Gane said.
But that's not all Gane is doing.
Despite his assets being frozen, despite a bank foreclosing on a $750,000 mortgage on his $1.1 million office, despite dozens of angry investors, despite a grand jury investigation looking at criminal charges, Gane is still raising money.
He's running a business called the Covenant Network, pitching $49 memberships to evangelical Christians across the country, offering them discount health insurance, office supplies and background checks for their church employees.
Gane's attorney tried to convince the Securities and Exchange Commission that Gane's business should continue and that it does not conflict with the asset freeze and injunction that a federal judge issued after U.S. postal inspectors raided Gane's business May 15.
The SEC, though, was unconvinced. Last week, the commission asked a federal court to declare Gane in contempt of court for violating the injunction.
Besides operating the Covenant Network, SEC attorneys alleged, Gane leased a car, might have benefited from a $230,000 sale of his house by his former wife and bought a diamond ring for his girlfriend.
The SEC earlier said that Gane had diverted $2.86 million of his investors' money to himself, his two children -- Guy W. Gane III and Jenna, both named as relief defendants -- company Vice President Lorenzo Altadonna and others.
Gane spent $321,000 on travel and meals, the SEC said, and paid $79,000 to a landscaper.
>Investors want justice
Meanwhile, federal prosecutors continue to present evidence to a grand jury, seeking a criminal indictment of Gane and Altadonna.
The News spoke with five of Gane's 90 investors who feel that Gane, 53, and Altadonna, 35, swindled them.
Gane, who has two years of college but no degree, has been in the securities business for 30 years. The SEC said he did not have a license to sell securities through his companies.
Altadonna, a native of Binghamton, is a St. Bonaventure University graduate and is married to Gane's niece Nicole.
Both men drove late-model cars -- Altadonna had a BMW and a Lexus and a custom-made motorcycle, while Gane drove a new Cadillac -- and liked to spend money, their investors said.
The two had a radio program on WHLD called "Money Is Funny But It Ain't No Joke" and offered financial advice over the air.
The two induced people to invest, their investors said, by guaranteeing 10 percent annual returns. They said they were investing in condominiums in Maine. The investors later learned that there were no condominiums.
"We want justice," said Donna Sirianni, a lab technician from Buffalo, who invested $100,000 with Gane's company through Altadonna. Her sister Diane and Diane's husband, both General Motors employees, invested $200,000.
"I want him in jail," said Donna Sirianni's husband, Mario, a retired Buffalo housing inspector.
Mario Sirianni invested $79,000 in the Covenant Network two weeks before Gane's company was raided. After he changed his mind a few days later, Sirianni said, the company refused to refund his money.
Others who feel swindled were part of the Buffalo labor community.
"We unfortunately got taken advantage of," said Tom Campbell, who runs a public relations firm that does a lot of business with labor unions. "We don't want anybody else taken advantage of, especially in the religious community."
Campbell and the Siriannis met for breakfast with other investors and compared stories. One man, a Nabisco retiree, told the group that he had invested his entire life's savings, $600,000, with Gane.
Campbell said that he considered Gane a friend and that Gane had helped him and John Kaczorowski, the former president of the local AFL-CIO Council, raise $50,000 in phone cards for local soldiers stationed in Iraq and Afghanistan.
The three flew to New York City in 2004 and appeared on Fox News to pitch the phone cards.
Campbell invested $33,000 of his money with Gane, and Jan Borman, a former president of a telephone workers union, invested $100,000.
>Declines to answer
Campbell and Borman met for months with Gane, trying to come up with a financial package for labor union members who were about to retire.
They said Gane tried to rush them into an agreement, they refused, and the next thing they knew, they were watching television footage of the raid on Gane's office.
"We had known him; he had done good things with the community," Campbell said in an interview, along with Borman, at The News.
What does Gane have to say?
"The only thing I can say," Gane told The News at his office last week, "and I hope I can say this for a fact: I'm going to make sure nobody loses their money."
He referred questions to his attorney, William G. Bauer of Rochester, who declined to comment.
Altadonna's attorney, James W. Grable Jr., said his client is a victim of Gane, as well. "He and his family have lost money in this, too," Grable said. "He absolutely swallowed the same story that the investors swallowed -- hook, line and sinker."
Grable said that Altadonna has cooperated with SEC investigators and that he has contacted federal prosecutors so his client can talk with them.
"Once they've had the opportunity to speak to Lorenzo, they'll recognize he doesn't deserve to be treated the same way," Grable said.
When SEC attorneys took a deposition from Gane on Oct. 22, court records show, Gane invoked his Fifth Amendment right against self-incrimination in response to hundreds of questions.
Among the SEC questions Gane declined to answer were claims from investors that he would pay the penalties for withdrawing money early from retirement accounts to invest with him.
One of the rare SEC questions Gane answered concerned Konstantinos Samouilidis, a Greek who Gane said was interested in investing $4 million to $5 million in his company.
Gane said that he and Samouilidis formed a company in the British Virgin Islands but denied that he transferred any of his investors' money offshore.
Gane again took the Fifth Amendment when the SEC attorney asked him if he had sent $600,000 of local investors' money to Denkon, described as a motorcycle parts store in Florida owned by Samouilidis. Denkon is also named as a relief defendant -- or someone who has received ill-gotten funds as a result of the actions of the named defendant -- in the SEC action.
>'Most charismatic guy'
Gane declined to answer questions from The News about the Covenant Network. He told Campbell and Borman that G. Steven Pigeon, the former Erie County Democratic chairman and now a political fundraiser and consultant, is a 10 percent owner of the Covenant Network.
According to his Web site, the Covenant Network was founded by the Rev. Gary Kellner, an evangelical leader.
"If that indeed is the case," Kellner said when asked about the Web posting, "it is without our authorization."
Kellner said he discussed the idea with Gane but withdrew from the project because Gane would not put the deal in writing.
"I will say I certainly became uncomfortable," Kellner said.
Pigeon said that he introduced Gane to Kellner, that Gane made substantial political donations to then-Sen. Hillary Rodham Clinton of New York -- records show Gane donated $9,200 to Clinton -- but that he has never been involved in Gane's business. "I'm not a 10 percent owner," Pigeon said. "I'm not in business with him."
Prosecutors say a hallmark of Ponzi schemes, in which early investors are paid by new investors, is building on trust.
Gane made inroads into the labor movement through his raising of funds for the phone cards, and Altadonna, according to the Siriannis, did it through his personality.
"He is the most charismatic guy you could imagine," Donna Sirianni said. "A real paisano."
Her sister Diane lives in the same housing development in Wheatfield as Altadonna and said Altadonna persuaded her and other neighbors to invest.
"He sucked us right in," Donna Sirianni said. "He would tell me, 'If I ever lose your money, I will repay you out of my own money, out of my father's money; he's a multimillionaire.' "