EG Man Charged In $8 Million Ponzi Scheme

by | Jun 17, 2019

By Elizabeth F. McNamara

East Greenwich resident David Wagner, of Downing Street, was arrested earlier today in what authorities in New York are calling an $8 million Ponzi scheme. He and Marc Lawrence of St. Petersburg, Fla., are accused of forcing employees to invest in their company then misappropriating the funds between 2013 and 2017.

The investigation, conducted by the office of the U.S. Attorney of the Southern District of New York and the FBI, focused on several corporations they collectively called “Downing.” Among the entities listed under Wagner’s name in Rhode Island are Downing Investment Partners, Downing Partners, and Wagner Family Real Estate Partners, all based in West Warwick, and Downing Management Company and Nova Corp., based in North Kingstown.

The U.S. Securities and Exchange Commission has also filed charges against the two men.

According to New York authorities, Wagner, as chief executive officer, and Lawrence, as president of various Downing entities, solicited money for Downing, which they said was a venture capital firm that was going to invest in health care startups. They promised to provide sales, operations, and management expertise to these companies to help them bring their products to market. That, in turn, was supposed to generate returns for Downing investors, who were actually Downing employees.  

Wagner and Lawrence and others acting at their direction, according to New York officials, raised more than $8 million in investments from “employee-investors” located across the United States, including in the Southern District of New York, as a requirement of employment with Downing.

The employees invested between $150,000 to $250,000 in Downing, but they soon learned the company did not have access to capital, often could not make payroll, and had no products to sell. The employee-investors learned the two men had misrepresented all aspects of the company. In 2016, several of them sued Wagner and Lawrence, who then started yet another corporation to repeat the same practice with new “employee-investors,” according to New York authorities. The majority of the more than $1.5 million raised for the new company (Cliniflow) was used to support the other Downing companies and to pay off Wagner’s expenses.

According to New York officials, Wagner received two grants totaling $500,000 from the state of Connecticut in 2017 by promising to relocate Cliniflow from New York to Connecticut. Some of that money, authorities allege, was used to buy Wagner’s daughter a luxury car.

Wagner, 54, and Lawrence, 54, were each charged with two counts of securities fraud, one count of conspiracy to commit securities fraud, one count of conspiracy to commit wire fraud and one count of wire fraud.

Wagner is the second East Greenwich resident this spring to be accused of multi-million fraud. Monique Brady of Lenihan Lane was arrested in early May for bilking family members, friends and others out of nearly $5 million in a real estate management scheme.

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