Chesco investment manager pleads to $25M fraud

Tony Young, a former Kennett Square investment manager, pleaded guilty Tuesday to a $25 million fraud in which he used client money to pay for a lavish lifestyle in Chester County, Maine and Palm Beach, Fla.

The 39-year-old college dropout, who obtained $95 million from 73 investors between 1999 and April 2009 and used $68 million to make payouts to investors, faces up to 30 years in jail for mail fraud and money laundering when he is sentenced on Oct. 28 by U.S. District Court Judge Juan R. Sanchez.

Unaccompanied, Young arrived at the 65-minute hearing in Philadelphia just a few minutes early, ducking his head through the door and hesitating a moment before taking a seat beside his lawyer, James J. McHugh Jr., a federal public defender.

Then, wearing a dark gray pin-striped suit, a light blue shirt and a green tie with small white checks, Young answered "yes" or "no" to a litany of questions from the judge about whether he understood the charges and the rights he would lose by pleading guilty.

Young, whose investment firm, Acorn Capital Management, was shut down by a Securities and Exchange Commission civil lawsuit on April 2009, pleaded not guilty to the criminal charges in April 2010.

He declined to comment after the hearing Tuesday.

The government's change of plea memorandum filed Tuesday described how Young conducted his fraud, including his use of spreadsheets to keep track of what he told his accountants about investments compared to what he told clients about their investments and how he used whiteout and a typewriter on official tax statements to change the information that he sent to investors.

Young, who denied starting out as a Ponzi schemer, told investigators that his theft got out of control "when he realized that he could fraudulently transfer funds to himself with no oversight by others," the memorandum said.

Among those transfers was $1.9 million to buy a house in Palm Beach, which is now empty and on sale for $1.95 million as part of the effort by a court-appointed receiver to gather money for investors. The receiver has recovered $9.8 million, much of it from the sale of properties in West Marlborough Township and Mount Desert, Maine.

Young, his wife, Neely, and their two young children now live in West Palm Beach, Fla.

Young, who claimed to have helped an Acorn partner, W.B. Dixon Stroud Jr., turn around Chester County's Landhope Farms chain of convenience stores, also told Judge Sanchez that he is helping his wife start a neighborhood market and deli, called Pine Market, which he described as "like a Wawa without gas."