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DA: Hicksville Man Charged With Operating Gift Card Ponzi Scheme
Craig Ginsberg
Nassau County District Attorney Kathleen Rice announced that a Hicksville man has been charged with 12 felonies after allegedly operating a Ponzi scheme that promised investors he could procure gift cards to nearby stores at steep discounts, and then stealing what authorities believe could be as much as $4.1 million of their money.
Craig Ginsberg, 48, was charged with two counts of grand larceny - 2nd degree; nine counts of grand larceny - 3rd degree; and one count of scheme to defraud - 1st degree. He faces up to 15 years in prison if convicted.
Rice said that, beginning in late 2006, Ginsberg told family, friends and business associates that he could procure gift cards to stores like Target, Best Buy, Nordstrom's and Toys R Us, as well as Visa and American Express gift cards, for 50 cents on the dollar, but that they must wait three months to get their cards. The DA said that Ginsberg would purchase gift cards at face value and tell his victims that he got them for half-price. Victims would then increase the dollar amount of future purchases, and start bringing in other friends and family members.
Those new to the scheme were eager to be part of its "success," and would pre-pay thousands of dollars for more gift cards they thought were coming. The scheme fell apart in April 2008 when Ginsberg could no longer maintain it. Almost all of the victims who invested money in 2008 received nothing.
Currently, 35 victims have stepped forward claiming losses totaling more than $2.4 million. Investigators believe that there may be as many as 63 victims with a total theft of more than $4.1 million.
In addition to the gift card scam, Ginsberg also claimed that he could procure luxury suites for Islanders and Knicks games as well as the Super Bowl. According to Rice, Ginsberg told victims that if they fronted the money to purchase the suite from a distressed owner, he could flip it for a profit and get them a huge return on their investment. The DA said Ginsberg also ran a similar scam by telling victims that he could buy overseas timeshares from distressed owners and then sell them for a huge profit.
Victims included doctors, lawyers, accountants, and the congregation of a South Shore temple that lost a collected $15,000. One victim lost nearly $1 million in gift cards and timeshare investments. Several others lost hundreds of thousands of dollars.
"For Mr. Ginsberg to steal from his friends and family is reprehensible," said Rice. "It is imperative for investors to do their research before writing a check, and to remember: if it looks too good to be true, it probably is. Eventually all Ponzi schemes, large and small, collapse under the weight of their greed. It's just a matter of time."
The defendant was apprehended the afternoon of March 9 as he was leaving the Nassau University Medical Center, where he spent the last week in the hospital's psych ward. Authorities believe the defendant admitted himself after learning that investigators were close to toppling his scheme.
Handling the case for the District Attorney's Office is Bureau Chief Robert Emmons of the Government and Consumer Frauds Bureau.
The charges are merely accusations and the defendant is presumed innocent until and unless proven guilty.
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