A Westfield man faces federal charges after being accused of executing a Ponzi and money laundering scheme. Acting U.S. Attorney John Childress says George Blankenbaker is charged with two counts of wire fraud and one count of money laundering.
Childress says Blankenbaker created three business entities between May 2008 and August 2016: Stargrower Commercial Bridge Loan Fund 1 LLC, Stargrower Asset Management LLC and EDU Holding Trust to execute the schemes.
Childress says Blankenbaker was able to convince 100 people to invest more than $10 million in his Stargrower entities and told investors that the funds would be used to finance the use of shipping containers of food in the international consumer products market.
According to information filed in federal court, Blankenbaker instead took funds, on 300 separate occasions between September 2016 and May 2019, and diverted the investments to make interest payments and return principal payments to other Stargrower Entities investors, and to also pay for personal expenses and unrelated business ventures. Childress says 34 investors lost over $1.4 million.
“The victims of this scheme placed enormous trust in Mr. Blankenbaker to wisely manage and invest their hard-earned money,” said Childress. “Instead, he exploited their trust through deception and lies for his own personal gain.”
The information states Blankenbaker used his EDU Holding Trust to use investor funds to buy life insurance policies on the secondary market at a lower price than the face maturity amount of the policies. Investors received a “life settlement purchase agreement” from Blankenbaker stating the investors were beneficiaries of the trust and would receive compensation from profits. He told investors the Bank of Utah would serve as an escrow agent to take the proceeds and then distribute them to investors.
Childress says in August 2016, one of the policies purchased by the trust died and a check of more than $2.5 million was issued to the trust by the life insurance company, but was never deposited into the Bank of Utah escrow account, instead Blankenbaker deposited the funds into a PNC Bank account he opened in the name of EDU Holding Esc Acct. Childress says some of the funds were transferred appropriately, others were transferred to another account Blankenbaker controlled at PNC in the name of another of his Stargrower businesses and was used for purposes unrelated to the trust, which resulted in a loss of more than $110,000 to a trust investor.
Assistant U.S. Attorney James Warden says Blankenbaker faces up to 10 years in prison on the money laundering charge, and up to 20 years for each wire fraud count. He also faces a maximum fine of $250,000 on each count, and up to three years supervised release following any prison term. Warden says Blankenbaker intends to plead guilty to all counts.