BOSTON, March 18, 2013—A West Roxbury man is expected this afternoon in Suffolk Superior Court and his wife is scheduled to appear next month on charges that they ran a multi-million dollar Ponzi scheme and used investors’ funds to pay for their own lavish lifestyle, District Attorney Daniel F. Conley and Boston Police Commissioner Edward Davis announced today.
Boston Police detectives began the investigation last year. On March 13, the Suffolk County Grand Jury returned indictments against STEVEN PALLADINO (D.O.B. 9/11/57) and LORI PALLADINO (D.O.B. 2/17/61), charging the couple with four counts of larceny over $250, three counts of making false entries in corporate books, one count of uttering, and three counts of usury, commonly referred to as loan sharking. Steven Palladino is also charged as a common and notorious thief based on more than two dozen prior larceny convictions in Suffolk Superior and Norfolk Superior courts.
Steven Palladino’s arraignment is expected during the court’s afternoon session, which begins at 2:00 p.m. Lori Palladino and the corporation itself are scheduled to be arraigned on April 4.
According to prosecutors, the Palladinos operated a Ponzi scheme through their company, Viking Financial Group, Inc., which Lori Palladino and the couple’s 28-year-old son incorporated in 2007. The three family members are the company’s sole employees.
Prosecutors allege that Viking borrowed money from investors, who were told by Steven Palladino that the funds would be used to provide loans at a higher interest rate. Very little of the money was used to make loans, prosecutors said, and it instead funded a lavish lifestyle for the Palladinos. Money borrowed from new investors was then used to repay earlier investors and to make monthly interest payments to all of the investors, prosecutors said.
Transactions show that investors’ money was often transferred from Viking’s account into personal accounts held by the Palladinos and used to cover personal expenses including a vacation in the Bahamas, rent for Steven Palladino’s mistress, and hundreds of thousands of dollars paid to casinos to cover apparent gambling losses, prosecutors said.
In addition, Steven Palladino allegedly made use of investors’ funds when he paid $350,000 to satisfy a condition of his probation on a 2007 Superior Court conviction for defrauding an elderly relative.
Prosecutors alleged that fake loans were entered in Viking’s corporate books to make them appear balanced. The named recipients of these made-up loans never received loans from Viking, prosecutors said.
The indictment also alleges that three of the real loans Viking extended in 2007 and 2008 charged interest rates well beyond the 20 percent maximum allowed under state law. Of those loans, prosecutors said two charged interest exceeding 60 percent and a third charged over 200 percent interest.
All defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.