A federal judge has sentenced three Omaha men to prison for operating a fraudulent investment scheme that bilked at least 100 people out of approximately $4 million.
Senior federal judge Joseph Bataillon sentenced the three.
Jonathan Arrington, 45, will serve five years in federal prison after being convicted of wire fraud.
53-year-old Michael Kratville has also been convicted of wire fraud and will serve four years in federal prison.
Michael Welke, who is 40, will serve three years in prison, also for wire fraud.
The court will determine appropriate restitution amounts later.
According to United States Attorney Deborah Gilg, the three ran a fraudulent investment scheme between 2005 and 2008 through Elite Management Holdings Corporation and MGM Enterprises. Gilg says the three solicited money from friends to be placed into investment pools managed by EMHC and MGM. The three claimed the money would be traded in commodity futures contracts and off-exchange foreign currency contracts.
The three had claimed their expertise and skill netted returns exceeding three percent every month from early 2002 until at least 2007. They also claimed they had procedures in place to prevent losses.
Federal prosecutors say not only did the defendants never successfully trade in futures or foreign currency, but the trading made by the companies resulted in nearly total losses for every investor.
The three covered the losses through false account statements that provided false returns and false account balances. Instead, the three used the investments for personal use and to pay other participants in a Ponzi-like scheme.
The United States Postal Inspection Service investigated the case.