Fredrick Scott Pfeiffer, a Greenville resident and co-defendant in the Capital Investment Funding securities-fraud case, pleaded guilty Wednesday to two counts of securities fraud and one count of conspiracy.
Pfeiffer, 47, was sentenced to 10 years in prison, which will be suspended once he has served six years. That will followed by a probationary period, a judge said.
Circuit Judge Cordell Maddox ruled Pfeiffer could spend the last two of the six years in home incarceration, which Pfeiffer’s attorneys advocated in arguing he was attempting to rebuild his life and to pay restitution.
Investors, however, told Maddox of financial losses that imperiled many Upstate families and they said Pfeiffer deserved a prison sentence.
Pfeiffer, a Furman University graduate who is married with five children, could have faced 20 years in prison. The judge ordered Pfeiffer to report to prison by 5 p.m. Sept. 27. He has remained free on bond since he was indicted by a state grand jury.
Maddox said restitution will be determined later.
A court-appointed receiver has been attempting to collect assets of the firm, which sold promissory notes to investors, according to court records. The receiver is trying to determine if several hundred CIF noteholders can recover $38.5 million they are owed.
In a hearing at the Anderson County Courthouse, Pfeiffer, who worked as an attorney, told the judge that he was “humbled and embarrassed to be standing here in front of you.”
He said, “I’ve stood here many times counseling my clients,” and “I never dreamed that I would stand ... before you.”
“My actions in representing Capital Investment Funding did not live up to the high standards that are expected of me by society, by the bar (association) or by myself,” Pfeiffer told the judge.
He worked for 10 years in military intelligence, his attorney told Maddox.
Now he has lost his law license, Pfeiffer said.
“I did wrong,” Pfeiffer told the judge. “I am deeply sorry for the actions of mine that contributed to the losses that were suffered by these investors.”
Creighton Waters, an assistant deputy attorney general who helped prosecute the case, told Maddox that many CIF noteholders were elderly and financial losses left them depressed, unable to pay doctors’ bills and living in poverty.
Gene Brooks, an 82-year-old retired engineer, told the judge that he and his family lost more than $1 million with CIF.
“I don’t have too much sympathy for Mr. Pfeiffer’s cause,” Brooks said. “He should have known better. There’s no excuse for what he did. Everybody is sorry after they get caught.”
Jacqueline Rice said in court that she and her 101-year-old mother invested with CIF because of attractive interest rates.
“He has consciously put us all in financial distress,” Rice said of Pfeiffer. “He has to pay for it with some (prison) time.”
In a plea agreement with prosecutors, Pfeiffer pleaded guilty to state grand jury felony charges of one count of conspiracy and two counts of securities fraud.
Pfeiffer had been indicted by the state grand jury in June 2012 and again in June 2013 on various offenses.
Pfeiffer was indicted for his role in the operation of Easley-based CIF, which received money from South Carolina residents to re-lend to other businesses, according to prosecutors and court records.
Pfeiffer was at times an attorney for CIF and had ownership interests and managerial roles in related entities, including Cosimo LLC, which made loans with CIF’s investor funds, according to prosecutors and court records.
He concealed from investors former CIF manager Arthur Field’s ownership interests in Cosimo through use of a fictitious person called “Henry Rex,” according to prosecutors and court records.
Pfeiffer engaged in what a state grand jury indictment said were “commercially unreasonable business practices and transactions” to generate profits, fees, and other monies for himself, his business entities, and his law firm, to the detriment of Cosimo’s ability to repay the money it had borrowed from CIF, according to prosecutors and court records.
In a plea agreement with prosecutors, Field in May pleaded guilty to 11 counts of securities fraud, two of conspiracy and one of forgery — all of the charges against him. He is awaiting sentencing and agreed to cooperate with investigators.
He could face up to 23 years in prison, prosecutors said. Field has remained free on bond.
Pfeiffer and Field were friends, according to court records.