Erie Co. Seniors To Recover Funds Lost In Investment Scam

Attorney General Spitzer today announced the civil recovery of more than $1.1 million for a group of senior citizens in Erie County who were defrauded by an unscrupulous financial planner.

The recovery is the result of an agreement with several local financial institutions and follows the prosecution of Randall Cedrik, 43, an Angola-based financial planner. Cedrik was accused of taking advantage of elderly, widowed and disabled clients as part of a scheme to sell various securities. He pleaded guilty to criminal charges relating to the scam in January, and will be sentenced in Erie County Court on March 18th to 1 to 3 years in state prison.

Spitzer was joined in Buffalo today by several of the victims in the case to announce a court order and a separate voluntary civil agreement to provide restitution. Under the agreement, the Brian O’Mara Agency, John Hancock Insurance and venture capitalist Robert Logel have provided funds to compensate consumers. Cedrik was affiliated with these companies at various times. In addition, Key Bank has forgiven home equity loans secured by two of the victims at Cedrik’s urging in order to provide funding for the fraudulent investments. The companies were not implicated in any wrongdoing, but nevertheless agreed to provide funds to compensate the consumers harmed by Cedrik’s actions.

"These investors are fortunate in that the bulk of their retirement funds are being returned to them – thanks to the responsible actions of several local companies," Spitzer said. "In many cases, however, assets are lost to fraud or risky investments. It is critical that seniors and all investors exercise caution in financial planning."

Starting in November 1996, Cedrik began selling insurance products and annuities, mostly to elderly consumers in Western New York. After fours years, Cedrik stopped selling insurance, and launched his own business, Global Asset Consulting, LLC, which he promoted as a money management business. Cedrik approached the elderly consumers to whom he had sold annuities and convinced them to liquidate their retirement holdings and invest in his new business. In at least two cases, Cedrik convinced elderly widows to mortgage their homes and give him the proceeds. Cedrik also promised his clients a return of 8.25 percent on their investments and partial ownership of his company. However, Cedrik later lost the money on risky investments.

In the criminal case Cedrik pleaded guilty in January to the following charges: Grand Larceny in the Third Degree, a class "D" felony; Scheme to Defraud in the First Degree, a class "E" felony; and Fraud in the Sale of Securities, a Class "E" felony. He will be sentenced March 18 in Erie County Court.

During his criminal plea, Cedrik admitted that he made false representations to convince several elderly people to invest vast sums of their savings in his company, Global Assets Consulting.

In a civil court order signed by Hon. John A. Michalek, Justice of the Supreme Court, Erie County, Cedrik was banned from estate planning and selling or offering for sale securities, insurance products, or other financial instruments.

The case was prosecuted by Assistant Attorneys General James M. Morrissey of the Buffalo Regional Office and Cydney A. Kelly of the Criminal Prosecutions Bureau, under the supervision of Deputy Bureau Chief Viola Abbitt. Assisting in the investigation was Harold Frank of the Attorney General’s Criminal Investigation Bureau.