The owner of two Buffalo-area financial services firms has been accused of running a Ponzi scheme estimated to have cost investors around $5 millon in a 51-count indictment.

Guy Gane, owner of M-One Financial and Watermark Financial Services Group of Amherst N.Y. was charged with mail fraud, conspiracy to commit mail fraud, securities fraud and money laundering. Each charge carries a maximum penalty of 20 years in prison, and fines of between $250,000 and $5 million, or both.

Also charged were James F. Lagona, and Ian Campbell Gent.

To date, by far the biggest Ponzi scheme fraud handled by the US courts was that of Bernard Madoff, who has been jailed for a $65 billion fraud that hit a number of wealth management firms, banks, investment funds and scores of individual investors.

US Attorney William J. Hochul, Jr. stated in a press release: "There are certainly many legitimate investment companies who provide valuable financial services: however, this is yet another cautionary tale that investors should be careful with their money, and if it seems too good to be true it probably is."

The indictment alleges that Gane and others falsely told the investors that their money would be used to invest in waterfront real estate and in building dormitories in Maine.

According to the indictment, no such investments were made; Gane used the money to pay back earlier investors, to pay salaries to himself and his employees, to advance cash to his children, to pay travel expenses, mortgage expenses, rent, cleaning, landscaping and other operating expenses.

The other defendants, Ian Gent and James Lagona, worked for Gane and his companies, and are accused of encouraging the sale of debentures or promissory notes to pay off earlier investors.

The indictment was the culmination of an investigation by a host of US agencies, including Special Agents of the United States Postal Inspection Service and Special Agents of the Internal Revenue Service, Criminal Investigation Division.

The evidence was presented to the Grand Jury by Assistant US Attorney Gretchen Wylegala, who will be handling the trial.