Original subtitles

In this episode of American Greed, ride them, cowgirl.

Rita Cronwell appears to be a humble small -town civil servant, which is

a double life as a world champion horse breeder. It's a deception that comes at

a huge price.

Everything that I've learned about showing horses, you must either be

independently wealthy or you're stealing the money.

When this cunning comptroller diverts more than $53 million of Dixon,

money into her horse empire,

She leaves a city on the verge of collapse.

People are going to have to lose their jobs to balance this budget. For what? A

divorce? For a trophy?

Are you kidding me? And later, Staten Island native Joe Mazzella wants to help

friends and neighbors with the promise of using their money to turn distressed

properties into highly profitable residential oases.

Joe's pitches.

We're just like you going out and having a beer with a friend. He lures in

retirees, policemen, firemen, and even members of the deaf community.

But this opportunity is a $14 million scam, where his clients' savings and

end up as gutted as his junk properties.

I was calling him every single day.

Where's my money? Where's my money? Where's my money? And there was no

Nothing came.

In the fall of 2011, as autumn leaves begin to warm the landscape of the

picturesque town of Dixon, Illinois, a cold reality is taking hold.

The city was drowning in debt. There were streets that went unpaved. There

sidewalks that went, you know, unfixed because the city, as they believed, had

no money to take care of those sorts of things.

Dixon Mayor Jim Burke hears the message of distress year after year from the

city official pulling Dixon's purse strings, Comptroller Rita Cronwell.

She would present the figures for the annual budget workshop, which

showed that it was going to be nip and tuck because of the financial situation.

But this fall, Cronwell is taking vacation time to prepare for a quarter

exhibition.

She's hoping to add to her already extensive collection of trophies as a

champion show horse breeder and exhibitor.

Back in Dixon, however, the woman filling in for Cronwell goes through the

city's financials and uncovers a mysterious bank account under Cronwell's

control.

In September alone, she finds more than $750 ,000 are inexplicably siphoned

into that strange account from the city's coffers.

She alerts the mayor.

Our city clerk brought a bank statement to me, and she

said, I cannot connect this with anything.

I started to get sick to my stomach because I realized this was a big ripoff

going on.

Six months later, Mayor Berg sits in front of the citizens of Dixon and

from media outlets across the country to explain what authorities believe may be

the biggest municipal fraud in U .S. history.

First of all, I'd like to thank the FBI for their comprehensive response to our

request for a criminal investigation into this matter.

This is a traumatic, upsetting event that the citizens and council are

experiencing. Traumatic and upsetting are not words typically used in

association with Dixon, Illinois.

U .S. Marshal Jason Waddillo is dispatched to Dixon just days after

Burke's press conference in the spring of 2012.

The city was the size of 15 ,000, 16 ,000 people, good, hardworking farmers,

lot of farmers in the community. You know, your typical heartland of America

city.

Rita Cronwell has worked in Dixon City Hall since 1970, beginning as an eager

high schooler and eventually making her way up to city comptroller in 1983.

My name is Dan Langloss. I'm the chief of police in the city of Dixon. By the

time Dan Langloss becomes the Dixon chief of police in 2008, Cronwell has

the trusted guardian of the city's finances for 25 years.

She was very highly regarded, very well respected.

If you had a question, go to Rita. If you need something, go to Rita. And

everybody always looked at her that she could fix any problem or just take care

of anything that needed to be done.

If Cronwell's dependability is exhibited in her work, her passion is on display

in another arena, showing quarter horses at exhibitions nationwide.

Marsha Freeman breaks and trains horses near Cronwell's home in Illinois and

remembers Cronwell's early years in the industry in the mid-'80s.

At that point, I think she was just like the regular horse person showing horses

as a hobby, which would involve moving in on a Thursday, showing horses Friday,

Saturday, Sunday, and returning back home and going back to a normal job and

work week.

But Cronwell takes this more seriously than a weekend hobby. In 1990, she

her own horse breeding business named R .C. Quarter Horses, LLC.

There's only one problem.

Showing horses is an expensive hobby, so you're...

You're going to need to have some startup cash to do it correctly.

With her humble background, Cronwell doesn't have enough money to support the

boarding, medical care, transportation, and trainers necessary for a world

-class breeding program.

But as Dixon's comptroller, large amounts of cash pass through her hands

day. According to Assistant U .S. Attorney Joe Peterson, on December 18,

Cronwell crosses a line that will change her life and the city of Dixon forever.

She opened a secret bank account in the city's name, and only she has control of

it. She named it the RSCDA account, which stood for some acronym involving a

sewer, reserve sewer account, but it really was not a legitimate city account

all. Because Cronwell has full authority to write checks on the city's behalf,

it's easy for her to filter government money into the new account.

She was creating fictitious invoices, purportedly representing different

projects that were going on in the city that, in fact, never were going on. And

then she would pay the bills. She would pay the invoices and then deposit those

checks into the secret bank account.

As the FBI will come to learn, with no one else's eyes on the secret account,

Cronwell is free to divert the city's money into her personal business.

And she does.

It has become known as the single largest municipal fraud in U .S.

When American Greed returns, Rita Cronwell uses Dixon's money to become a

beater. But the city of Dixon is just beaten down.

It becomes a free -for -all for her. She was aware of the infrastructure project

that needed to be performed in the city. But again, feeding her ego seemed to be

more important.

By 2010, small -town comptroller Rita Cronwell has developed an unbridled

passion for victory in the world of show horses.

Mike Jennings is a veteran horse auctioneer who has also been showing and

judging horse competitions for more than 30 years.

And even he is impressed as he watches Cronwell turn a one -horse stable into

American quarter -horse dynasty.

Over the last...

I'd say 10 to 12 years, she had elevated herself to be in the very top echelon

of breeders and exhibitors. If she is not the leading owner or breeder of

champions, she would be very close.

Cronwell comes to own more than 400 horses, with more than 50 of them

world champions in their class.

And she isn't shy about flaunting her success in front of other horse

exhibitors.

When she would show up, it was this entourage of tractors and trailers, you

know, 18 -wheeler type rigs. Rita Cronwell, in her mind, became a brand.

And it was that brand that was built over time that was feeding her ego.

And the only way it was being fed in this case was by siphoning money off

the city of Dixon.

Because with prize money typically coming in at $5 ,000 to $10 ,000,

doesn't equal riches.

It's expensive to get to the level that she was at, and she had horses in over

15 states where she would pay people to board the horses, train them, feed them,

and that cost a lot of money.

Everything that I've learned about showing horses, you must either be

independently wealthy or you're stealing the money.

And Rita Cronwell is not independently wealthy.

While Dixon citizens believe that Cronwell's world champion horse business

for itself in prize money and breeding fees, in reality, it's all being funded

by the city coffer. And each year, her theft grows more outrageous.

This sort of depicts a graph of what the total loss was, what she was stealing.

She started out in 1991.

She stole $181 ,000.

As it progressed in 1999, she had hit the million -dollar mark. And then two

years later, she's into the $2 million mark.

It escalates to over $5 million by 2008.

It all depicts the total loss of more than $53 million.

It's a simple fraud that Wadillo says points to a systemic failure of Dixon's

government. There were no checks and balances.

There was no separation of duties, no segregation of duties.

She did it all.

With that power, Cronwell has the city's checkbook to use as she pleases.

When you have part -time city administrators, the mayor's part -time,

commissioners are part -time, you know, they're trying to earn a living to

provide for their families doing something other than running the city.

simply weren't asking enough questions or perhaps the right questions.

In the meantime, Cronwell is stealing more money under Dixon's nose every

And every year, Dixon is forced into painful decisions to stay afloat.

In April of 2009, they needed to cut $38 ,000 that was intended to be used to

purchase ambulance equipment.

While at the same time, in 2009, Rita Cronwell stole almost $5 .6 million from

the city of Dixon.

Year after year, it's more of the same. Less money for Dixon's basic needs and

more money for Rita Cronwell's world champion lifestyle.

When she purchased several motorhomes during the course of the scheme, the

one she purchased for over $2 million.

She also purchased several homes.

She purchased land. She purchased a large number of vehicles. She purchased

jewelry for herself and others.

Hundreds and hundreds of pieces of jewelry. A lot of it custom -made, as

see, with her name on it, with the RC, again, her brand. Good Ride was the

theme of that necklace.

And back on her ranch, her extravagant trophy room is a shrine to all her

accomplishments, paid in full by Dixon taxpayers.

The room, it reeks of wealth.

She had custom -made bar stools that had a horse theme.

The sofas in the trophy room were of a horse theme. Again, it was clear where

she was spending a lot of the money that she was stealing.

But to residents of Dixon, the newfound wealth is a perfectly reasonable

explanation.

Well, there would be stories like, you know, floating around town that, you

know, that she'd sold a horse for, say, $250 ,000.

She had people coming from all over the United States and even some people from

Europe that came for this auction. So she did a great job of cultivating this

image of having a very, very profitable and successful horse business.

Besides, Cornwell works hard to keep her modest down -home image in Dixon

separate from the celebrity image. she cultivates on the exhibition circuits.

It is my understanding that she really didn't show a lot of glamour in the

She wasn't wearing a lot of expensive jewelry.

You know, wasn't wearing a lot of expensive clothing.

Now, the clothing that she bought to take to the horse shows, if you're in

industry, you understand that it is rather expensive.

It's another way that Cronwell keeps her double life a secret.

We've had a lot of people come into our industry and spend a lot of money.

Sometimes you find out where their money came from and sometimes you don't. But

mostly we're glad they're in our business, you know, for a while.

But she won't be an industry leader much longer.

When American Greed returns on her quest for fame as a horse breeder, Rita

Cronwell lets go of the reins at work and takes a nasty fall.

The fraud was caught because, again, as is often the case with fraudsters, it

occurs when they go on vacation.

By the fall of 2011, Dixon Comptroller Rita Cronwell's message of austerity has

become agonizingly repetitive.

Each year at the budget hearings, you know, she would show up, certainly in

latter years, as came out as evidence in this case, she would show up with

booklets where she had characters of, you know, someone drowning or, you know,

pair of scissors.

And her message was cut, cut, cut.

Eventually, the heads of the city's various departments learned to simply

asking for funding.

Again, not to be critical of the form of government, but when you have part

-time city administrators, the mayor's part -time, the city commissioners are

part -time, they were relying very heavily, understandably, as many city

officials do, on their annual audits that were occurring, or perhaps not

occurring. 21 annual audits and no warnings of any red flags.

Nothing. I'd read these audits over every year, and there was never any

indication that...

that they found anything that we ought to be taking a look at. Another piece of

the puzzle is that evidence came out during the civil litigation that the

auditor had a personal interest in Rita Cronwell. She had had him over for

dinner. He had asked her out on dates.

So perhaps his eyes were a little glazed over in looking at the numbers.

Could the entire town have been seduced by Cronwell's charms?

How could they have not known $50 million were missing from the town's

To put this in context, when the city was a smaller population, a smaller

government, when the large box stores didn't exist in the community,

when the Illinois toll road wasn't going through the county, the budget wasn't

as large.

And so as the city grew over time...

Understandably, there was more revenue being generated from taxes, from real

property, and the like. As that grew, the city wasn't necessarily missing it

because they didn't know it existed.

In October 2011, Cronwell looks to add yet more trophies to her collection from

one of the biggest single -breed horse shows in the world in Columbus, Ohio.

But it comes at a huge cost.

While filling in for Cronwell, a city clerk uncovers Cronwell's phony sewer

account that has eluded city hall's eyes for more than 20 years.

One of the statements from the RSCDA account came across her desk. She looked

it, didn't recognize it as a city account, and then expressed those

the mayor, and then he forwarded that information to the FBI.

For Mayor Burke, it's the beginning of six months of nearly unbearable anxiety

as he sits back and watches Cronwell continue to steal millions while the FBI

conducts its investigation.

Once I knew what her method of operation was, we were able to see that she was

taking these funds.

And I even told the FBI agent once, I said, you know, if we don't find this

pretty quick, there won't be any money left at the rate that she's going.

Finally, in the spring of 2012, Mayor Burke is told that the FBI is ready to

make an arrest.

Early in the morning on April 17th, Cronwell walks into Mayor Burke's office

finds three FBI agents waiting.

I said, these three gentlemen would like to talk with you. She said, sure.

And her face never changed a motion or anything.

I was watching that carefully to see how she would react. And it was just

like... Real nonchalant.

Almost made me wonder if she hadn't, you know, kind of mentally rehearsed.

Later that day, Cronwell is escorted from the office, charged with one count

wire fraud.

But for U .S. Marshal Jason Wadillo, the work is just beginning.

He seizes Cronwell's possessions and brings in auctioneer Mike Jennings to

conduct one of the largest, most prestigious horse auctions in the world.

All to raise money to give back to the town.

This was a world -prized herd that was being sold.

And I knew that people were going to come from around the world to Dixon,

Illinois for this auction.

And they were going to spend money. They were going to eat at restaurants.

They were going to stay at hotels.

And all that tax revenue was going to be a byproduct of our auction.

But it was very important to me.

Having sat down across from the dinner tables of many of these people in this

community who were true victims, who were victimized for so long and deprived

services, public services, it was very important to me to have that auction,

live auction, in Dixon, Illinois.

Cronwell's horses bring in $5 .5 million.

Combined with selling Cronwell's other properties and assets, the U .S.

return to Dixon about $9 .2 million.

Most of the rest of the $53 million she stole are simply the sunken costs of

Rita Cronwell riding after her extravagant and expensive dream.

In the five months that we managed the herd, we spent about $1 .8 million in

costs. And that's simply to manage the herd. We're not showing the horses.

So, you know, our taking over of the operation, I think, speaks to knowing

we were paying, clearly what she must have been paying.

But it turns out, all is not lost.

In October 2013,

Mayor Burke addresses the town of Dixon once again.

The year before, the city sues its two auditors for not detecting $53 million

being diverted into Cronwell's pocket.

And sues Fifth Third Bank for allowing her to operate the secret account right

under their noses.

Without admitting wrongdoing, the three companies agreed to pay $40 million back

to the city of Dixon.

Out of this will come a better, a sounder, and a more attractive Dixon for

of us to live in.

Cronwell pleads guilty to one count of wire fraud.

And on February 14, 2013, is sentenced to 19 years and seven months in prison.

If she's ever going to see Dixon's economic recovery...

It won't be until she's 77 years old.

In the meantime, people who work with her day in and day out, like Police

Dan Langloss, still have questions.

How could you, Rita?

How could you? How could you hurt so many people? How could you do this? How

could you get people's jobs, people's families at risk over your greed?

For what, a horse?

For a trophy?

Are you kidding me?

Next on American Greed.

Staten Island native Joe Mazzella convinces investors that he can make

by turning distressed properties into gold mines.

But his promises are as empty as the buildings he claims to restore.

Real estate development was never a vocation for him. His real business, his

real vocation was fraud.

Winter 2011.

Linda Giovinello and her husband Tony are house hunting in the woods of North

Carolina.

They're earning money for a $175 ,000 investment with Staten Island real

developer Joe Mazzella. And after 27 years of marriage and a lifetime of hard

work, they think their vision of their golden years is within their grasp.

The dream home, the retirement, everything.

We thought we were getting there.

While searching for the perfect home by the water in which to live out a secure

future together, they get some disturbing news.

Our friend called, and he said, turn your TV on.

And I said, why?

And he said, well, the FBI just went into Joe Mazzella's office and seized

files. The couple cuts their trip short and reaches out to Mazzella to find out

what's going on.

And then he called me and said, nothing to worry about, everything's fine.

And I said, Joe, don't tell me that.

I said, FBI does not go in unless something's wrong. And like my husband

that was the start of a broken dream.

Their dream is alive and well only months earlier when they first come

Joe Mazzella. As FBI agent John Robertson explains, Mazzella is a former

insurance salesman looking to expand his horizons.

In the early 90s, he begins his own company that eventually becomes the

Atlantic Group.

The Great Atlantic Group was a one -stop shop for real estate services. You

could do loan origination.

You could modify your existing mortgage.

You could do wills, estates, trusts.

To many people, people just in off the street for a loan modification, that's

all he would provide them. He'd modify their mortgages or he'd provide them

mortgage loans.

But for others, Joe would identify them as people with

significant money to invest, and Joe would offer real estate investment

services.

Mazzella tells these deep -pocketed clients about an opportunity to invest

commercial and residential properties across New York and New Jersey. He says

that with their investments, he'll be able to rehab and develop these

into prime holdings.

The phrase he used to always use was, everything's rocking and rolling.

Loretta Lynch is the U .S. Attorney for the Eastern District of New York.

He had this foolproof method, according to Joe Mazzella.

Invest your money with me. I guarantee 10%, sometimes 8%, sometimes more, but

usually around 10%. And he would differentiate himself from the big

who were, according to him, promising 20 % and 24%. So he's making people feel

safe.

Mazzella guarantees the investment with a promissory note.

and projects such confidence that he even provides a schedule letting

know exactly what their investment will be worth every step of the way.

Joe would provide this to his investors to say, look, here, you can see in July

of 2008, eight years from now, this is exactly what your investment will be

worth. While the numbers are enticing, in Staten Island, what really seems to

pull in clients is the man doing the picking.

Joe wasn't some guy sitting in a 100 -story building on 48th and Park in

Manhattan. Joe was a Staten Islander. He was your kid's baseball coach.

He was your uncle. He was your nephew.

Joe's pitches were just like you going out and having a beer with a friend. And

just a normal conversation turns into, hey, listen, I've got an investment

program.

It may be something you want to hear about. And, in fact, Joe would also hold

investor meetings where his friends would bring in their friends.

He started off by providing routine tips on how to save money that you can get

from a Google search and then went into his spiel and into his pitch, and he

brought out all these pictures of these properties that he was telling his

investors were going to be worth all this money.

This is right across from the reservoir.

This is about 120 units.

Ann and Joseph Martucci have been married for 30 years.

They first heard of Mazzella in 2006, at a time when the couple could use some

financial help.

Ann suffers from diabetes, and Joseph survived a heart attack earlier in the

year, and neither is able to work.

The family is collecting disability, but they can't seem to make ends meet.

We were drowning, literally drowning.

Martucci says that her husband has always provided for her and their two

children. But after facing his own mortality, he not only worries about the

present, but a possible future when he may not be around to help at all.

So he was just desperately scrambling, continuously scrambling.

How is he going to provide?

Joseph Martucci finds a ray of hope.

when he hears about Joe Mazzella from a local businessman.

The couple meets with Mazzella in his Staten Island office.

He kind of connected with my husband, like, almost immediately, because my

husband was looking for a way out. On the other hand, I'm not easy, and I

just didn't trust the whole situation.

But he was so scared, and rather than argue with a man who's had a heart

I said, it's his money.

Convinced, Joseph eventually invests his entire 401k with Mazzella, worth more

than $260 ,000.

According to the paperwork, their investment is backed by the mortgage on

Mazzella's properties in Trenton.

This is what Joe described to his investors as a renovation project

942 Prospect Street in Trenton. This is what actually was located at 942

Prospect Street.

This is bird feces all over the first two steps. The windows are smashed out.

The place was empty.

As a matter of fact, none of Joe Mazzella's properties are living up to

artist's vision.

Joe owed money on these properties to his lenders.

They were worth nothing.

He had some pretty drawings.

He had some very nice renderings.

But the reality of those properties were they were nothing but a financial

drain. And they simply were a cover. They were the conduit by which he

people's money into his own pockets.

When American Greed returns,

Joe Mazzella recruits more than 100 investors into his scheme, preaching

Island values to Staten Island people.

They didn't hear the snake oil salesman. They didn't see the carnival operator.

They saw a neighbor.

They saw someone who really was espousing their values.

To see more of Joe Mazzella's money pits, go to AmericanGreed .CNBC .com.

Feeling greedy?

Want more than your share of behind -the -scenes dirt?

Follow us at AmericanGreedTV on Twitter.

We'll be right back.

Between 2007 and 2011, purported real estate developer Joe Mazzella brings in

more than $14 million from over 190 investors on the promise of

renovating and developing commercial and residential properties.

Mazzella's defense attorney, Ephraim Savitt, believes the business is built

solid foundation.

He claims that Mazzella has been satisfying investors for decades.

There are 20 years that preceded the Joe Mazzella case.

Those 20 years didn't generate any problems whatsoever.

As the economy was good and real estate prices kept on rising, everybody was

doing good.

Nobody complained.

But according to Special Agent John Robertson, it's all a ruse.

Most investors only think they're making money. Many of them simply roll over

their returns and never actually get their hands on their so -called

When somebody says, you know, how's your money with Joe? Well, what do they do?

They look at their amortization piece of paper, and they look and they say, oh,

well, my $100 ,000 investment, it's not worth $190 ,000. Look how well I'm

doing.

Investors believe that Mazzella has commercial and private real estate

properties all over New York and New Jersey making profits.

But in reality...

His properties are absolute money pits.

This is a property that Joe described to be his, located on Stokes Avenue in

Ewing, New Jersey.

And this is 8894 Stokes in reality.

Joe never even owned this piece of property.

He didn't put the money into those properties to develop them, and he had

motivation to develop them. His motivation was to fleece people.

For Joe Mazzella, the fraud was his job.

And the job pays quite well.

After a few expenses.

Well, the money that he would take in from new investors would go to pay the

old. It was a classic Ponzi scheme.

I have to add, though, a good part of it went to pay Mr. Mazzella. It went to

pay for his house in a fairly exclusive area of Staten Island. He went to buy

his cars.

He was a sports memorabilia nut, a great hobby if you can afford it with your

own money.

Unfortunately, he financed it with the money from his investors.

And Mazzella seems to have a particular skill in infiltrating different

communities within Staten Island.

Joe took the assets of an entire local postal union and squandered them. He

had many retired police officers and firemen liquidate their pensions in a

sum and invest them.

But Mazzella isn't limited to civic workers.

He also got himself in with a deaf community.

He had an investor who was deaf and introduced Joe to a lot of other deaf

people.

Tony Giovinello has been deaf since birth. After working for decades as a

mechanic in Center Reach, New York, he and his wife of 28 years moved to

Arizona. But Arizona isn't what they envisioned. And with a settlement from a

car accident, they're hoping to recapture better times.

When we were living in Center Reach,

Those are happy times. You know, we had a nice house.

We had a boat.

Tony loves fishing, loves boating. In Arizona, you just can't do

that, you know.

While back visiting New York, the Giovinellos hear from one of Tony's deaf

friends about Joe Mazzella.

We were in New York, and his friend...

told us about this person that he was investing money with, and that this

of his also had a lawyer friend that had also invested money with him. And

seven, ten years they've been doing it, and they had no problems. They were

getting their monthly income.

Linda decides to meet Bozella in person.

After hearing his pitch, she discusses the idea again with Tony.

I told him, I said, he seems to be fine. I didn't see anything that I didn't

like. And then we decided to invest $100 ,000 with him.

And that was in August of 2010.

What the Giovinellos don't know is that by August 2010, Mazzella is in serious

trouble. With the economy struggling, More and more investors are asking for

their money, and he's having trouble paying his clients their monthly

distributions.

Once he had about 150 to 200 investors, it became managing chaos.

How to is whack -a -mole. If one investor came up and they were screaming

money, Joe would pay him off, and hopefully another investor would come in

door the next day to make him whole again.

In his desperation, Mazzella turns up the recruiting efforts.

He's still trying to get money from people. He's still telling them that

real estate investments are profitable.

He kept using the phrase rocket and rolling when they weren't doing anything

declining.

Mazzella even comes up with a new investment opportunity, a golf course

condominium project in upstate New York called Golden Greens.

In reality, it's just another empty promise.

This is what was supposed to be the golf course.

Absolutely no evidence of any development or the existence of any golf

whatsoever.

It's a lot as empty as Mazzella's own bank accounts.

Most of the $14 million Mazzella has taken in from more than 190 investors in

the past four years is gone.

It's used to pay interest to past investors.

Near the end of 2010, December, Joe may have had about $15 ,000 across the

different bank accounts. Even his own home, he had a million -dollar mortgage

on. The only thing that Joe owned were the sports memorabilia that were hanging

in his office.

When American Greed returns, Joe Mazzella can't keep the balls in the air

longer. And some investors aren't going to just let them fall without a fight.

I was calling him every single day.

Where's my money? Where's my money? Where's my money? And he kept saying to

it's... You know, it's coming. The lawyers are working on it. Blah, blah,

blah, blah, blah, blah.

And there was no money.

In the summer of 2009, Joseph and Ann Martucci received stunning news.

Ann is diagnosed with lymphoma.

On September 16th, She goes in for her first chemotherapy treatment.

The next morning, the family's troubles get even worse.

Ann has to call an ambulance when her husband complains of chest pains.

He walked out, down my front steps, got on the gurney himself, and all of a

sudden, we see his arm go to the side.

I did not believe that that was going to be the last time I saw him.

At only 54 years old, Joseph Martucci dies that morning of congestive heart

failure.

The Martucci's have $260 ,000 invested with Staten Island real estate developer

Joe Mazzella.

They believe the interest in the investment has been accruing in their

But with their husband's death, Martucci begins taking monthly payouts.

I...

was receiving money for one year of, I believe it was $2 ,210.

And it just, it was great at the time because I needed it. That's exactly what

my mortgage payment was. So that went from here to my mortgage.

Meanwhile, inside the Great Atlantic Group, Mazzella's luck is about to run

In October 2010, an employee of the company contacts the FBI with

that Mazzella may be running a Ponzi scheme.

Special Agent John Robertson begins investigating Mazzella's properties and

finds one rat trap after another.

All the hopes and dreams of these investors were in awful areas in

We're in an empty warehouse in Utica.

And then we went to the golf course where we thought if there's going to be

hope that it's legitimate, it'll be at the golf course.

Well, we go to the golf course, and there's not even a golf course. There's

nothing there.

On January 28, 2011, the FBI raids Mazzella's office and pulls him aside

questioning. I said to Joe, look, you know, we have enough bank records to

this room.

And what these bank records show me is that you've been perpetrating a Ponzi

scheme for several years now. And Joe said, I cannot argue the bank records.

If you can't argue the bank records, and the bank records show you taking money

from Peter and paying Paul, you've got a Ponzi scheme.

Mazzella is charged with 12 counts related to the fraud and pleads not

In trial, his attorney, Ephraim Savitt, asserts that the situation is just a

case of a desperate man trying to operate under difficult circumstances.

Now, there are 20 years that preceded the Joe Mazzella case.

Those 20 years didn't generate any problems whatsoever, any complaints, any

lawsuits. Things went wrong essentially when the real estate market fell.

The developers of various real estate tracks were unable to pay Mazzella,

as a result of which Mazzella was unable to pay his clients, as a result of

which he reached out to other clients with representations.

not all of which were entirely true. In fact, some of them were false.

Desperation leads to this kind of a situation.

The jury doesn't sympathize. They find Mazzella guilty on 10 of the 12 counts

charged.

On June 15, 2012, he is sentenced to 10 years in prison and ordered to repay

$14 million in restitution.

But it's unlikely the victims will ever see any of it.

John Robinson came out after me when it was all over because I was hysterical.

And he came out and he put his arm around me and he said, Ann, make believe

never had the money.

The healthiest attitude in a case like this is that you have to accept the

possibility, if not probability, that you'll never see this money again. All

can do with some of these investors is give them a hug. I mean, it's it. It's

all you can do.

People have lost their homes, they've lost equity in their homes, they've lost

their savings accounts, and they've lost their retirement accounts.

But I have to tell you, as tremendous an impact as that has, what is really even

worse has been the personal impact on so many of these victims.

Their trust in themselves has been destroyed.

They no longer think that they have good judgment.

They feel shame.

They feel guilt.

I would cry.

Yeah, he would cry, you know.

I mean, we sat and had long conversations, and he says, you know,

-earned money is just gone, you know. And I said, yeah, it's gone.

The Giovinellos still hope to get to North Carolina someday, but now

is a long way off.

Linda has returned to nursing in New York while Tony tries to find work in

Arizona. In the meantime... They have to sort through the pain they've suffered

and the toll it's taken on their marriage.

Look at me.

Tell me what you feel.

They want to stay married.

I just want you to know that I don't blame you.

I mean, it was a joint decision.

We made...

The investment together.

You didn't force me. I didn't force you.

And I love you.

And Martucci's husband is no longer with her. And now even his legacy is largely

gone. It's devastating.

It really is devastating.

It's a devastating feeling to know how a man has worked since he's 17 years old.

And he's gone.

And everything he worked for is gone.

Bartucci was depending on Mazzella's payments to pay her mortgage because she

has diabetes and is recovering from lymphoma and can't work.

And thanks to Joe Mazzella, she now faces the likelihood that she'll lose

home.

Still, she is trying her hardest to keep her thoughts on the good in life.

I wake up in the morning and I can say hello to my two children.

That's the most important thing in my life.

And so they come and put the lock on the store.

That's the way it's going to be.

I can't do anything about it.

And I'm not going to let that SOB be a part of my thoughts, be a part of my

anxiety. He'll have his day, and either he's having it now or God's got

something else in store for him.

But he'll get his.

When you work for Steve Stevens.

Two big games tonight on the West Coast. You ready to kick some ass? We're going

2 -0 tonight. You better always be closing.

Good afternoon. How are you doing, sir?

Can a young agent cut it in the cutthroat sports betting biz? Is this

what you want to do or what?

Money Talks. All new right now.