Local Investment Advisor Charged with Theft After Allege Ponzi Scheme Revealed

A local investment advisor working out of East Wenatchee was arrested by East Wenatchee Police last week after allegedly defrauding several members of the community of hundreds of thousands of dollars.

According to the Notice of Arrest and Probable Cause Statement provided to Douglas County Superior Court, Gregory D. Lone was arrested on five counts of 1st Degree Theft related to a Ponzi scheme he ran under his company, Paramount Financial Advisors.

The East Wenatchee Police Department first learned of the alleged fraud after being alerted by a financial legal examiner from the Washington State Department of Financial Institution. The examiner initially told police he believed Lone had defrauded at least three elderly individuals by making them believe they were buying insurance or other investments, but Lone was actually spending their money on personal expenses. The examiner's office had previously received a complaint that Lone had been directing some clients to withdraw funds from their current investments and invest in Paramount Financial funds. Police were also told by the examiner that Lone never invested the client's funds into the financial institutions he represented but instead deposited the funds into different bank accounts and used the funds to pay for personal items.

According to the examiner, Lone has had some civil issues filed against him in the past for not explaing everything to clients.

The court documents state that in 2016, a now 96-year-old woman provided Lone with checks for approximately $200,000 worth of insurance. The examiner says Lone never purchased any insurance for the woman on her behalf. Although Lone never purchased any insurance for the victim, he was writing checks from Paramount Financial to her. The scheduled monthly payments eventually fell so far behind that the victim informed Lone that she could not even pay her rent, and that Lone needed to put money into her bank account. Lone then sent a check to her bank and it came back as not having sufficient funds. The victim now worries all the time about where she is going to live because she is going to have to move from her current residence, seeing as she can't afford it now.

In a separate incident, Lone had advised a 90-year-old woman to cash out $137,000 of her stock in Microsoft. He was supposed to invest $57,000 into other stocks and invest the remaining $80,000 back into Microsoft stock (after the victim told Lone that he had liquidated more Microsoft stock than she had wanted). After creating a fake certificate that he then provided to the victim, Lone used the money he obtained to pay the previous 96-year-old victim. The 90-year-old female victim eventually told investigators that she was able to get back all her funds from Lone.

In March of 2019, Lone allegedly received $200,000 from an 84-year-old woman who had inherited roughly $500,000 from her aunt that had passed away. Instead of investing the money, Lone first used the check to open a savings account under the name Paramount Financial Advisor. He later transferred the funds to a checking account, which Lone used to pay for general expenses. At one point, Lone told the victim's husband that he was trying to get an equity line of credit on his home and on his business, and he would have the $200,000 in approximately four-to-five weeks. The payment never materialized.

An 84-year-old man issued a check to Lone in 2019 for $100,000 after selling his home. The victim stated that there was a clause in his investment in which he would not lose his initial $100,000 unless he drew from it and any returns on the investments would be added to the initial amount. Those funds were then used to pay the 90-year-old female victim $90,000, according to the examiner. The 84-year-old male victim and his wife told investigators they moved into Bon Adventure Family Home and now they are going to have to move again because they are not going to be able to afford living there any longer. The couple said they cannot even afford to move until they can get access to the funds they had invested with Lone.

A former Chelan County employee also was defrauded by Lone. The man told investigators that he had been investing through Lone and that Lone owed him $30,000 that the victim has since requested back. According to the victim, after being contacted by the authorities regarding Lone, he confronted Lone. Lone allegedly stated, "Unless they subpoena you, you don't have to talk to them, but I would never tell you that."

An additional elderly couple was likely defrauded of tens of thousands of dollars, according to the court documents.

In January of this year, Lone finally met with investigators. In the case of the 96-year-old female victim, Lone stated he invested the $200,000 in seminars that he believed would generate on average between $1,000,000 and $2,000,000 a month in new clientele assets which would translate into anywhere from $70,000 to $140,000 in commissions. Lone further advised there was another investment in Hawaii that would have generated between $700,000 to $1,400,000 in commissions, but it fell through just like most of the big investments he had setup that year.

Investigators also asked Lone about the other cases. Among them, Lone said he had taken the $30,000 the former Chelan County employee had given him to invest and put it towards "marketing and trying to grow the business. Trying to get a return." Lone stated that the only money he has given back to the man was a $7,000 check since Lone was anticipating some funds coming in at the time. However, according to Lone, the money never came so the check he had given the victim was not good.

When asked why he didn't have the funds to pay the 84-year-old female victim back, Lone said, "Think we had spent it on other things trying to grow the business and marketing … trying to get a return … trying to build it back so we could get this paid and done."

When investigators asked Lone when he had met with any of the victims involved what they understood their money was going to be invested into, Lone stated they had the impression their funds were going to be invested into something a lot more secure.

Lone is also one-third owner of the Hard Hat Winery. He stated that he had not invested any of the funds acquired from the victims into the business.