Patrick J. Belzner, also known as “Patrick McCloskey,” of Selbyville, Del. was sentenced in Maryland to 15 years in prison followed, by three years of supervised release after being convicted on federal charges related to an elaborate investment scheme and tax fraud.
Belzner, 45, was also ordered to pay nearly $20 million in restitution. More than two dozen wealthy people were victims of the scheme.
According to Belzner’s plea agreement and court documents, from the fall of 2009 through August 2011, Belzner, a home builder, worked for a Baltimore real estate development business known as the McCloskey Group, which was owned by another home builder named Brian McCloskey.
During that time, Belzner conspired with McCloskey and others.
Prosecutors reported that Belzner and the conspirators advised wealthy individuals and investment advisers that in order for the McCloskey Group to obtain large loans for various real estate projects, it was necessary for the McCloskey Group to deposit substantial sums of money in an escrow bank account to set up that it had cash reserves or “liquidity.”
Belzner and his co-conspirators, represented to potential lenders that it was acceptable for the McCloskey Group to borrow these funds.
Belzner and McCloskey promised to pay potential lenders substantial fees or interest.
Belzner took elaborate steps to hide the activity, including the use of prepared scripts for other conspirators as a way to cut suspicions and fake bank statements and the “Ponzi scheme” practice of paying some people with the proceeds.
Belzner also pleaded guilty to evasion of assessed tax payments. In 1995, 1996 and 1998, Belzner was listed as taking $1,111,304.78 from his employer at the time, and in 1998, he took $186,146.71 from another employer, none of which he reported as income on his tax returns for those years.
To avoid paying income taxes, Belzner admitted that between January 2006 and June 2011, he intentionally concealed income and assets from the IRS and made no payments on his tax debt.
For example, Belzner placed his residences, other real estate and automobiles in the names of corporations that he formed. Belzner paid his personal expenses, including his mortgage, ground rent for a vacation home, construction costs on a house that he built, car payments, Ravens season tickets, and private school tuition from bank accounts he opened in the names of the corporations or from payments out of McCloskey Group accounts.
Belzner was also reported to have used people to act as “straw purchasers” for property that he acquired and to conduct financial and other transactions on his behalf. At Belzner’s direction, McCloskey Group employees and others also cashed more than $175,870 in company checks made payable to them, returning the cash to Belzner or using the cash to pay Belzner’s creditors.
Belzner also arranged for the McCloskey Group to pay many of his personal living expenses, rather than issuing him salary checks. Others involved in the scheme have pleaded guilty.
The sentence is part of efforts undertaken by the Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an effort to investigate and prosecute financial crimes across various areas.
