Boot is on the other foot for ‘bankster’ Del Biaggio

Former ‘young financial god’ William ‘Boots’ Del Biaggio III faces jail in a bank fraud backlash, says Charles Laurence

FIRST POSTED FEBRUARY 10, 2009

William 'Boots' Del Biaggio III sounds like he might be the Godfather, named for punishment meted out with his footwear. But Biaggio is no old-style mobster – he’s a 'bankster', the latest example of the sort of money-market rogue that America is learning to loathe.

Hailed as the King of Silicon Valley in its tech-boom days, and even "a young financial god", Boots, 41, is now holed-up in his San Jose hilltop mansion, decorated in palatial faux-Versailles, waiting for a judge to drop his gavel on an expected six-year prison sentence for securities fraud.

Fraudster William 'Boots' Del Biaggio III had wanted to buy the Nashville Predators ice hockey team, seen here grappling with the Vancouver Canucks

Nashville Predators tangle with Vancouver Canucks

It turns out that he used his network of venture capital banks and investment funds to bilk his friends and customers of some $60 million, passing money from one to another until they ended up paying his mortgage, his house decorator, his credit cards, a stake in a sports team, and large gambling debts in Las Vegas and the Bahamas.

'Boots', the prosecutors charged, was running a Ponzi scheme, just like his New York counterpart Bernard Madoff, although on a more modest scale. Madoff, out on bail in his multi-million-dollar Park Avenue apartment, faces trial on charges of defrauding his investors of $50 billion. But both men's schemes are based on the same fraud.

The trick is to take money from a new investor to pay the old one. It works until the supply of new marks goes dry and the loans and investments are called in. Boots even took one man’s money, used some of that same money to pay him a dividend, and then simply transferred the rest to his own bank account. His house of cards fell down when he was forced to declare bankruptcy with $50 million in debts last year. He'd blown the lot.

Boots’s wife left him and his mansion is for sale for just $4m in a falling market.

The Security and Exchange Commission, ridiculed as a toothless guard, saw nothing amiss with Boots's banks until called in by the bankruptcy court. The numbers they then found were passed onto San Francisco's federal prosecutors.

One charge of securities fraud involved forging an investor's account to make it look as if it was making a huge profit, and then using it as collateral for more loans. The fraudulent loans and the Ponzi investments together are thought to have reached $100 million.

"There's no question he's going to jail," said US District Judge Charles Breyer, who will pass sentence on June 10. He accepted a 'guilty' plea in a court hearing at which Boots agreed to sell everything in an attempt to refund his victims. Boots's wife left him last summer, and his mansion is up for sale for just