Mercer Islander charged with securities fraud in Ponzi scheme
By REPORTER STAFF
Mercer Island Reporter Staff
April 13, 2011 · Updated 9:24 AM
Stephen J. Klos was charged on April 6 with 28 counts of Securities Fraud for running a Ponzi scheme during which $1.4 million was allegedly stolen from several elderly victims in the Seattle area. Klos met victims at his church and told them that he would invest their money, but used most of the money for his personal benefit and to pay back other investors. Prosecutors also charged a co-defendant, Robert A. Justice, with five counts of Securities Fraud for his alleged role. Klos raised a total of $3.5 million from investors since 2004.
Pastor Greg Asimakoupoulos of Mercer Island Covenant Church said that he had been concerned about Klos as early as 2005. When contacted by a family member of one victim, he and others went to police in 2008. Asimakoupoulos said that Klos had been repeatedly asked to stop soliciting members for his various schemes and was ultimately told to leave the church that year. He later began attending a church in Bellevue.
A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity.
King County Prosecutor Dan Satterberg said elderly victims were targeted in the scheme. "The defendant used his charm and influence to persuade elderly victims to invest with him but instead used the money for his personal benefit and lifestyle," Satterberg said. If convicted as charged, Klos, 84, faces a sentence range of 51 to 68 months in prison. Justice, 52, could be sentenced to 12 to 14 months. Arraignment is scheduled for April 20 at 8:30 a.m. in courtroom 1201 at the King County Courthouse.Contact Mercer Island Reporter Staff Reporter Staff at email@example.com.