A former Crystal Lake man has been charged in connection to a Ponzi scheme that lost investors millions.

Alfred Gerebizza, 56, formerly of Crystal Lake was charged alleging that he and co-defendant Daniel Spitzer, 51, of Barrington engaged in a Ponzi scheme that caused losses totaling approximately $34 million, according to federal court documents.

Gerebizza was charged with 10 counts of mail fraud and six counts of filing false individual and corporate income tax returns, according to court documents.

The indictment alleges that the defendants fraudulently obtained more than $105 million from approximately 400 victims who invested in funds that the defendants purportedly operated from the U.S. Virgin Islands.

Gerebizza was a sales agent and trader for investment funds operated by Kenzie Financial Management in the U.S. Virgin Islands. Spitzer was the principal officer and sole shareholder of the company, as well as the principal of other corporate entities, according to the Federal Bureau of Investigation.

The defendants sold investments to the public in the various Kenzie Funds in the form of membership and limited partnership interests. Through sales agents and various marketing materials, they informed investors and potential investors that their investments would be used primarily in foreign currency trading, that the Kenzie Funds had never lost money, and had achieved profitable historical returns, according to the FBI.

The FBI claims both Gerebizza and Spitzer continued to raise funds from new investors in order to pay current investors, which they failed to disclose to both new and earlier investors. Between 2004 and July 2010, the defendants raised approximately $105 million, misappropriated a significant portion of those funds, and caused losses of $34 million.

According to the indectment, Gerebizza and Spitzer told investors that their Kenzie Funds had rates of returns ranging from 4.52 to 13.54 percent over the previous five years, although bank accounts for the Kenzie Funds over the same period on the $105 million clients invested showed less than 1 percent.

According to court documents, the men told potential investors that the Kenzie Funds were worth $250 million in 2009 but the funds had about $4 million in its bank accounts at the time.

According to prosecutors, Gerebizza was trying to set up a fake company so he could repatriate over $1.3 million to the United States from his offshore bank accounts while he was working unknowingly with an undercover IRS agent.

The indictments also states that Gerebizza was charged with the six counts of filing false tax returns for a period between 2005 and 2007 when he maintained ARG Management, Inc.

Prosecutors are attempting have Spitzer's property forfeited at 4017 Wyndwood Drive near Crystal Lake, along with properties in North Barrington and Wisconsin.

According to the FBI, the indictment charging Gerebizza was unsealed in mid-October after he surrendered voluntarily to authorities in Atlanta.

He remains in custody after being transferred to Illinois to face prosecution in U.S. District Court.

According to the FBI, each count of mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, or the Court may impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater, and restitution is mandatory. The tax counts against Gerebizza alone carry a maximum penalty of three years in prison and a $250,000 fine.