David A. Mazzeo of Guilderland and his Schenectady partner in crime, Michael Caruso, were each sentenced on Friday to state prison for what the State Attorney General’s Office described as their “wide-ranging scheme to defraud several investors and lending institutions of nearly $150,000, and for laundering over $200,000 in ill-gotten gains to conceal their crimes.”

Each was also ordered to pay restitution to his victims.

Mazzeo, 59, facing his fourth investment fraud conviction in six years, got a prison sentence of nine to 18 years that will run consecutive to his current two-and-a-third- to seven-year sentence. Mazzeo is to pay $133,091 in restitution.

Caruso, 62, got a sentence of six months and five years of probation. Caruso is to pay $127,235 in restitution.

A jury, presided over by Thomas A. Breslin in the Albany County Supreme Court, heard over 30 witnesses during a two-week trial, and returned a verdict in just three hours, finding both defendants guilty of all counts charged.

When Mazzeo was arrested in the spring of 2017, his lawyer, Francisco Calderon, told The Enterprise,  “This isn’t some type of scam. Mr. Mazzeo is a businessman.”

Both Mazzeo and Caruso were convicted of second-degree money laundering and of first-degree scheme to defraud, both felonies.

Mazzeo was also convicted of these additional felonies: three counts of third-degree grand larceny, fourth-degree grand larceny, securities fraud, first-degree offering a false instrument for filing, and fourth-degree criminal tax fraud.

“The defendants engaged in an elaborate and brazen scheme to defraud investors in order to pay for previous scams,” said Attorney General Schneiderman in a statement. A release from his office described events unfolding this way:

Between July 2012 and September 2013, Mazzeo and Caruso engaged in a complex, quid pro quo scheme, in which Caruso opened a personal bank account in his own name and let Mazzeo use the account to steal nearly $150,000 from multiple individuals, all while Mazzeo was under investigation for other investment fraud schemes.

The pair used the money to pay themselves, to pay attorney fees and court-ordered restitution for Mazzeo’s prior crimes, and to pay off additional victims who were threatening criminal charges against Mazzeo. In exchange for Caruso’s help, Mazzeo assisted Caruso in drafting and obtaining a number of fake loan-commitment letters to stave off lenders threatening foreclosure on Caruso’s former business, Prozone Lockers Inc.

Mazzeo was convicted in May 2012 in Fulton County of the third-degree grand larceny, and sentenced to five years of probation. As part of his probation sentence, Mazzeo was required to make restitution payments to the victim of his Fulton County crime.

Shortly after Mazzeo’s first conviction, in June 2012, Mazzeo was again charged with third-degree grand larceny in Montgomery County, for allegedly stealing $25,000 from someone in an investment scam. Caruso posted bail for Mazzeo in Montgomery County, signing a $50,000 bail bond on Mazzeo’s behalf.

Then, in August 2012, Mazzeo was indicted in Albany County and charged with second-degree grand larceny for stealing $150,000 in a real-estate investment scam and diverting the money to pay off prior victims.

In early 2013, Mazzeo pleaded guilty to a misdemeanor on the Montgomery County case and paid $25,000 in restitution to his victim. In February 2013, Mazzeo was convicted of felony grand larceny on the Albany County indictment and sentenced in April 2013 to five years of probation and ordered to pay $150,000 in restitution to his victims.   

During the same time period, Caruso owned and operated a failing businesses, Prozone Lockers, which made lockers for college sports teams. The evidence showed that Caruso’s business had never been financially viable and that, in 2011, it began to fail. By May 2012, Caruso was facing eviction from his factory in Amsterdam, and he desperately needed assistance in staving off default from his three lenders in Montgomery County.

Accordingly, just three weeks after Caruso bailed Mazzeo out on the investment fraud charges in Montgomery County, on July 18, 2012, Caruso opened the personal bank account at First Niagara Bank. He then gave Mazzeo exclusive authority over the debit card on the account, so that Mazzeo could use the account to obtain money from new investment victims and avoid detection while he was under investigation by authorities looking at him for his prior crimes.

The evidence at trial proved that during the entire time Mazzeo was under investigation, he exclusively used the Caruso account to conceal his new investment fraud scheme. However, after resolving his criminal cases by guilty pleas in 2013, Mazzeo opened an account in his own name.

For Mazzeo’s new scam, he approached individuals and told them he was close to securing deals in the coal or natural-gas industry and just needed them to give him some money to put toward the business expenditures needed to finalize the deal. With Caruso’s help, Mazzeo got nearly $150,000 from numerous individuals for these purported energy development projects.

In reality, Mazzeo and Caruso used the money entirely for personal purposes by funneling the stolen monies through Caruso’s account. These illicit transactions included payments to Mazzeo’s criminal defense attorney totaling over $20,000, restitution payments to Mazzeo’s prior victims totaling over $30,000, payments to other individuals threatening additional criminal charges against Mazzeo.

Additionally, Mazzeo made nearly $37,000 in cash withdrawals and personal expenditures in the Albany area, to pay for items at Victoria’s Secret, and for liquor and tobacco products. Stolen monies funneled through the account were also used by Caruso to prop up his failing business, Prozone Lockers.

In exchange for the use of Caruso’s account, Mazzeo and Caruso drafted and secured phony loan-commitment letters for Caruso between 2012 and 2013, which Caruso then knowingly submitted to lenders that were threatening foreclosure on his business assets, which would have resulted in his financial demise.

Those lenders, including NBT Bank and the Amsterdam Industrial Development Agency, relied on the fake commitment letters and held off Caruso’s financial demise for nearly 18 months.

The evidence at trial further showed that Mazzeo filed a false 2012 New York State personal income-tax return in which he failed to report the money he had stolen, and he failed to file a 2013 New York State personal income-tax return altogether, evading over $4,000 in taxes on his ill-gotten gains.