Raleigh investment adviser compared to Bernie Madoff gets 40 years in prison for fraud

Story updated Sept. 13 at 6:15 p.m.

Stephen Condon Peters, the Raleigh investment adviser who used clients’ money to build a luxury villa in Costa Rica and whose fraud conviction drew comparisons to Bernie Madoff, was sentenced Friday to 40 years in federal prison.

U.S. District Court Judge James Dever III described a systematic and prolonged scheme that involved Peters stealing clients’ money, obstructing an investigation by the U.S. Securities and Exchange Commission (SEC) and committing repeated perjury during his trial.

He read a list of Peters’ victims out loud, calling them “the backbone of America ... People who quietly get up every day, go to work and save and dream.”

He then described the VisionQuest founder’s obstruction as “unprecedented” in his 15 years on the federal bench.

“And it’s not even close,” Dever said.

Peters will have to pay restitution to his victims, which exceeds $15 million, according to a news release issued later on Friday.

In 2017, federal agents charged the VisionQuest founder with a operating a scheme that robbed investors of roughly $15 million. At the time, their indictment listed multiple items Peters might have to forfeit, including three horses named Cartagena, Princess and Hugo Boss.

That indictment charged Peters with investment adviser fraud, wire fraud and several other counts. Another indictment in 2018 added aggravated identity theft and concealing documents during an SEC investigation, among others.

Watches, guns and Costa Rica

During trial in U.S. District Court in Raleigh earlier this year, jurors heard evidence that Peters sold promissory notes and guaranteed an 8% or 9% annual return over five years. He offered the deal as a low-risk investment in revenue-generating businesses.

Instead, U.S. Attorney Robert Higdon said in a June news release, Peters stole much of the money as part of a Ponzi scheme, forging documents to throw off SEC investigators. He fabricated client balance sheets, wealth management contracts, business activity disclosures and internal compliance memoranda.

Before he handed down his sentence, Dever noted that a federal judge gave New York financier Madoff the maximum sentence despite his being 71 years old.

“He did that in June of 2009,” Dever said, “just as you were cranking up what would be your own eight years of fraud. ... Is a watch collection bought with stolen money, is a gun collection bought with stolen money, is a house in Costa Rica bought with stolen money, is having these possessions three years, five years, eight years until it all comes crashing down ... Are these possessions worth it?”

Apology unlike Madoff’s

Peters, 45, could have been sentenced to life in prison. He stood facing the judge and apologized for his clients’ losses.

“They certainly didn’t sign up for this,” he said. “My hope is I’ll be given the opportunity to pay back all my investors.”

Assistant U.S. Attorney William Gilmore noted Peters, who has a wife and two children, did not apologize for hurting anyone. Madoff apologized, Gilmore said, but “you had none of that here.”

“People must know that when you commit a crime like this ... there is going to be a day of reckoning,” Gilmore said.

One victim, Eric Harris, stood and described losing a fortune built by three generations of his wife’s family. “She has blamed herself,” he said, “but it is Steve Peters who betrayed us.”

Peters’ attorney Wes Camden described his client as having “tremendous potential,” having worked his way through college on football scholarships and having served in the Marines. He will never again have the ability to manage other people’s money.

“If he were able to even try to do something like that, it would take someone only a few minutes on the Internet — a basic Google search,” Camden said. “It’s going to leave Mr. Peters as a cautionary tale for anyone involved in this industry. There’s no doubt about that.”

Potential victims will have 45 days to submit claims of restitution that were “previously not known to the government,” according to a news release. People are asked to contact the FBI or the U.S. Attorney’s Office.

A previous version of this story incorrectly spelled Judge James Dever III’s name. 
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Josh Shaffer covers Wake County and federal courts. He has been a reporter for The News & Observer since 2004 and previously wrote a column about unusual people and places.