Bloomfield Hills

Hills investment planner gets 8 years for Ponzi scheme

By Mary Beth Almond
C & G Staff Writer

BLOOMFIELD HILLS — Orchard Lake resident Richard Taft Johnson, 67, was sentenced to eight years in prison in federal court March 26 for defrauding more than 50 victims of around $13.2 million in a Ponzi scheme.

Johnson was also ordered to pay more than $13.2 million in restitution to the investors, and U.S. District Judge Stephen Murphy appointed a receiver to determine what assets might be recovered to repay victims.

Doing business as Investor Planning Services in Bloomfield Hills, Johnson told potential investors that they could invest in a low-risk program called the American Charitable Program beginning in the late 1990s. Johnson led investors to believe they would receive a rate of return of 10 percent per quarter, and claimed it included the purchase of an insurance policy that he said would provide a future benefit to a charity or qualified nonprofit organization.

As is common in Ponzi schemes, Johnson paid out earlier investors — or those who demanded a return of their money — with newer investors’ money, and also diverted significant funds for personal use.

More than 130 victims in Michigan, Florida and other states fell prey to Johnson’s scheme, and a number of the investors lost their life savings because Johnson used their money to keep the scheme going until it began to unravel in 2008 and 2009.

At the sentencing, an 82-year-old victim told the court how Johnson had financially destroyed her family, while another victim said she and her husband, her 87-year-old father and her sister would never recover from the fraud of nearly $2 million they had incurred.

United States Attorney Barbara McQuade said Johnson’s Ponzi scheme was “insidious” because he represented it to be a safe investment that, ultimately, would benefit charitable and educational organizations.

“We consider it very important to investigate and prosecute such longterm predatory Ponzi schemes and help ascertain what, if anything, the victims’ might be able to salvage of their financial worth, which is why our office took the unusual step of asking the court to appoint a receiver,” McQuade said in a statement.

The FBI and state investigators in Michigan and Florida investigated the case.

Johnson’s attorney, Jerome Sabbota of Ribitwer and Sabbota LLP, said he thought the sentencing was “appropriate.”

“Sometimes you have to pay the piper, but it was not an unreasonable sentence in light of the criminal activity involved. I would have hoped it would be less, but he’s prepared to pay the penalty for his offense,” he said.

You can reach C & G Staff Writer Mary Beth Almond at malmond@candgnews.com or at (586)498-1060.