Genetti Admits Guilt in Bogus Bond Sales Totaling $39 Million
A Santa Barbara man pleaded guilty Friday of masterminding a bogus municipal bond scam that bilked hundreds of California investors out of $39 million.
John Anthony Genetti, 45, admitted on the fourth day of his trial in a Los Angeles federal court that he and three associates used the now-defunct FSG Financial Services Inc. of Beverly Hills and two other front companies to market the worthless bonds.
Genetti pleaded guilty to one count of racketeering, two counts of securities fraud and two counts of money laundering. He faces up to 60 years in prison and nearly $100 million in fines when he is sentenced on Jan. 4, said David J. Schindler, one of the federal prosecutors in the case. As part of the plea bargain, Genetti agreed to forfeit about $7 million in cash, real estate and personal property.
All three of his partners--Westley Scher of Beverly Hills, Joan Kantor of Los Angeles and Louis Vargas of Northridge--have already been convicted for their roles in the scam.
Scher has begun serving a six-year sentence in federal prison. Kantor and Vargas are expected to be sentenced in January.
A federal judge appointed a trustee for FSG last year. First Securities Group was closed in 1989 and Reserve Financial Group was shuttered by the federal government in 1991.
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