Gillette skips state licensing hearing

BY JOSEPH BUSTOS SVN REPORTER jbustos@svnmail.com CHICAGO - Indicted Sauk Valley investment broker Nevin Gillette failed to appear at a hearing Wednesday to determine whether he would permanently lose his state license. Gillette, 45, of Sterling, faces federal wire and mail fraud charges for allegedly running a nine-year Ponzi scheme in which he stole $8 million from 40 area people. The state Securities Department hearing officer, James Kopecky, did not immediately make a recommendation on Gillette's license, which was suspended Sept. 28 after an investor's complaint spurred an audit at which the broker allegedly confessed to the long-running scam. In addition to the loss of his license, Gillette could have faced up to $1.6 million in fines, which the state will not seek because it does not want to harm the investors' ability to recoup their money through civil litigation, said Jim Nix, the Securities Department attorney in charge of the case. "The fine could have higher priority status than investors recovering their funds," Nix said. "The department is pretty convinced the assets Gillette has is less than what's due to the investors." In addition to what he may owe his local clients, Gillette also owes $370,000 to Dorothy Nickel, a former Rock Falls resident now living in Wisconsin who successfully sued him in federal court there for unlawfully withdrawing money from her account. He also faces 20 years in federal prison and a fine of $250,000, or twice the amount of money he gained or twice the amount the investors lost, whichever is greater, for each of the two federal fraud charges. The investigation is ongoing, and more charges are expected, officials have said. "We believe the criminal court can adequately punish Mr. Gillette," Nix said. Kopecky did not say when he would offer a recommendation on the license suspension. "It varies on the case and the hearing officer," Nix said. "Generally, it comes within a month or two." The final order by the Securities Department usually is filed the same week, he said. In a Ponzi, or pyramid scheme, a broker solicits an investor for money on the promise of an above-market rate of return. To pay off the initial investor, the broker will use money solicited from a second investor; money from a third investor is used to pay off the second, and so on. The scheme lasts until the broker no longer can raise enough money to pay off investors. Among other things, Gillette is accused of taking money from two clients to pay Nickel, rather than invest it as he said he would. A call to Gillette's home Wednesday was not answered. Reach Joseph Bustos at 625-3600 or (800) 798-4085, ext. 529.