
A Crystal Lake man who is awaiting federal sentencing in a $8 million Ponzi scheme is facing new charges for allegedly stealing from a local veterans group in McHenry.
Alan J. Hanke, 60, of Crystal Lake, was charged on Wednesday with theft by deception over $10,000, a Class 2 felony, and fraud by use of debit or credit card, a Class 4 felony.
A criminal complaint filed in McHenry County Circuit Court alleges Hanke used a debit card belonging to Sons of The American Legion in McHenry without authorization.
Hanke, between January 2023 and March 2024, made cash withdrawals and purchases totaling over $10,000 with the card, the complaint said.
The complaint said the card was used at various restaurants and retail establishments, along with online websites.
A warrant was issued last week and Hanke was processed in the McHenry County Jail.
McHenry County Judge Carl Metz released Hanke from custody because the charges are not detainable under the state’s cashless bail law.
The judge ordered Hanke to have no contact with any member of the American Legion or Sons of The American Legion or any location of the two non-profit veteran organizations.
Metz also ordered Hanke to not hold office with any non-profit organization.
In June, Hanke pleaded guilty to conspiracy to commit securities fraud for his role in misappropriating more than $8 million as part of a Ponzi scheme, according to the U.S. Attorney’s Office for the Eastern District of New York.
As part of his plea, Hanke also admitted that he filed a bankruptcy petition and documents in a bankruptcy proceeding to conceal the conspiracy.
Hanke, who faces up to five years in prison in the case, was indicted in February 2024.
“Hanke admitted today that he conspired to defraud clients of millions of dollars of their investments, and then tried to cover up his crime by declaring bankruptcy which was an intentional abuse of the U.S. Bankruptcy Court,” United States Attorney for the Eastern District of New York Breon Peace said earlier this summer.
“Today’s guilty plea reaffirms my Office’s efforts to root out white-collar crime where we find it and ensure integrity in the financial markets and the court system,” Peace said.
The indictment said that between November 2018 and August 2021, Hanke — the sole member of IOLO Capital (IOLO) — persuaded numerous investors, often in meetings in New York City, to invest in IOLO or related companies run by him.
Prosecutors said Hanke promised investors high returns within short periods of time by investing in, among other things, “standby letters of credit,” “medium-term notes,” and “high-yield bonds.”
He also assured investors that their investments would be insured against losses, prosecutors said. Nearly all the money that the victims invested with Hanke was not recovered.
Prosecutors said the bulk of the victims’ money went to Hanke’s personal expenses, including cruises, airfare, hotels, gambling expenses and a luxury car.
Hanke also paid co-conspirators and other investors with money that he wrongfully obtained during the scheme, prosecutors said.
Hanke filed a bankruptcy petition in June 2021 in which he sought to discharge the debts that he owed to his victims.
In the bankruptcy petition, Hanke disclosed that he received monthly Social Security disability payments but did not disclose the millions of dollars of income he received from his victims, prosecutors said.
Prosecutors said Hanke also did not disclose the proceeds from the sale of an airplane or that he used the proceeds for personal expenses, including gambling and repairs to a close relative’s home, as well as $180,000 that was withdrawn in cash.
A sentencing hearing in the federal case is scheduled for October 31. He is scheduled to appear in court again in his new local case on October 11 for a status of preliminary hearing.