Prosecutors say he used money clients had invested in a fund he managed to repay others invested in a different fund.
NEWARK -- A former Middletown fire chief made his first appearance in federal court Friday on charges of running a Ponzi scheme using two investment funds he controlled.
Vincent P. Falci wore a white dress shirt and dark slacks beneath cuffed hands as he appeared before U.S. District Judge Steven C. Mannion in Newark. He is charged with two counts of wire fraud and one count of securities fraud.
The charges, filed by investigators with the U.S. Postal Inspection Service, stem from Mannion's alleged use of more than $5 million in investor funds for personal purposes.
Falci, 57, operated a number of investment funds under the names "Saber Funds," and "Vicor Tax Receivables LLP", according to the U.S. Attorney's Office. State officials have said Falci operated the funds as an unlicensed securities agent.
According to prosecutors, Falci first opened the Saber Funds in the late 1990s or early 2000s, and redirected investor money from those funds to bankroll risky ventures like day trading and real estate.
Authorities say Falci concealed losses from those ventures from investors, a move that ultimately got him into trouble with the state Bureau of Securities.
In a 2014 lawsuit, the agency accused him of misleading 182 investors by telling them he'd invested most of their money in tax liens, when he in fact used it to buy seven homes, among other things.
After a September 2015 consent order with the agency left him on the hook for more than $6.7 million, prosecutors say, Falci began stealing money from the Vicor fund to repay the Saber Funds' customers.
Prosecutors allege Falci stole $5.3 million from the fund between January 2015 and May 2016, using $500,000 of it to enrich himself and family members.
Defense attorney Joseph Sorrentino told the court that he was officially representing Falci for Friday's appearance only, and that he may be unable to continue with the case.
Ex-fire chief ordered to repay $6.7M
Falci was released on a $250,000 unsecured bond co-signed by his wife. At Sorrentino's request, Mannion agreed to relax travel restrictions on the release agreement so Falci can travel to Staten Island for attorney visits in a related civil matter.
Falci faces a maximum of 10 years in prison and a $250,000 fine on each charge if convicted, according to prosecutors.
MaryAnn Spoto contributed prior reporting. Thomas Moriarty may be reached at tmoriarty@njadvancemedia.com. Follow him on Twitter at @ThomasDMoriarty. Find NJ.com on Facebook.