A Toronto-area conman skipped his sentencing hearing in a U.S. court, for helping swindle more than $21 million from hundreds of victims, after prosecutors alleged he kept scamming people even after his arrest and guilty plea.
Antonio Palazzolo, 67, did not appear in U.S. federal court in Cleveland on May 8, when he was expected to be sentenced for the large, sophisticated investment swindle pulled by a gang of Toronto-based conmen.
What was supposed to be his long-delayed sentencing hearing after his guilty plea in 2022 turned into an abrupt five-minute session when Palazzolo failed to join Judge J. Philip Calabrese, two U.S. prosecutors and his own lawyer in court.
Calabrese said an arrest warrant would be issued, making him a fugitive.
If Palazzolo had shown up, he would have heard prosecutors tell the judge that the U.S. government no longer supports a reduced sentence because “he has continued to engage in similar fraudulent conduct since pleading guilty in this case,” according to a government memo filed in court a week before the hearing.
Prosecutors said Palazzolo kept pulling an almost identical fraud as the one he pleaded guilty to while he remained free in Canada on an unsecured US$20,000 bond while awaiting his sentencing.
As his hearing approached, three victims contacted U.S. authorities, two claiming he had ripped them off for big bucks and another that Palazzolo was trying to defraud him as recently as late April, the judge was told.
One victim showed the government an invoice from Palazzolo for US$10,000 for a pink diamond dated April 24, according to court records. That’s just two weeks before his scheduled court date.
Palazzolo’s sentencing in Ohio was scheduled after his wire fraud conspiracy conviction from his time as a crooked salesman with Paragon International Wealth Management, Inc., a Toronto firm where he went by the alias John Carson. He and other conmen duped victims in Canada and the United States into buy coloured diamonds for much more than they were worth.
The great Paragon swindle and its cavalcade of conmen is the focus of
an in-depth investigative feature
in National Post published last summer, called Jack of Diamonds.
The new allegations say that after a Toronto police raid on Paragon’s Finch Avenue West telemarketing offices in 2018, Palazzolo kept tricking gullible investors into sending him huge sums for low-value stones using his own company, called Pavillion Diamonds International.
Alleged victims complained to investigators of a scheme that played out the same as the one pulled at Paragon.
Customers were contacted by phone and convinced to make a small purchase of a pink diamond and were later lied to about how much that gem had increased in value in order to convince customers to send much larger sums of money — over and over — in hopes of a promised big payday that never came, court was told.
After a series of payments from one new complainant, the customer’s adult daughter became concerned and discovered his involvement in the Paragon fraud. She then secretly recorded a phone call with Palazzolo, prosecutors said. On the call he allegedly said he was the owner of Pavillion Diamonds.
She asked him if the name Paragon meant anything to him. He allegedly told her he had worked there but had been “exonerated” from any wrongdoing. She then called the FBI. Palazzolo’s contact with that complainant allegedly stretched from 2018 until 2023, which was after his guilty plea.
Another customer said he was convinced to spend US$115,000 in April 2022 on a diamond that a Pavillion salesman promised would double in value within a year, prosecutors alleged.
In June 2024, long after his guilty plea, Palazzolo allegedly contacted that customer again with an offer to sell the diamond for a payout. There was a catch. The customer had to first purchase another diamond for US$63,700 because the purported buyer wouldn’t purchase anything less than two carats of diamond weight.
The man sent him the money, court heard.
Prosecutors said the government could no longer support lowering Palazzolo’s recommended sentence for accepting responsibility, as often happens when someone pleads guilty.
“A defendant’s commission of new crimes related to the offense of conviction while on bond is inconsistent with acceptance of responsibility,” James Lewis, Assistant United States Attorney, wrote in the prosecution’s sentencing memo. “Given that Palazzolo has continued to engage in similar fraudulent conduct since pleading guilty, the government opposes Palazzolo receiving any reduction for acceptance of responsibility.
“The impact of this crime on Paragon’s victims was profound.”
Palazzolo was born in Rome, Italy. He got married at the age of 23 and had two children.
After living in several countries, he moved to Canada in 1991, court heard. He completed high school in Toronto and lived in Pickering, just east of Toronto, at the time of his arrest.
At a hearing in 2022 in Cleveland when he pleaded guilty on a video link from Canada, he said he didn’t have a job.
“I am helping my wife in her business,” Palazzolo said at his sentencing hearing. “We are formally separated, but we live in the same house. So, I help her with her business, and I do everything at the house.”
Palazzolo’s wife’s business is an online jewelry store, court was told.
At that 2022 hearing, prosecutors itemized his duplicity and scamming while working at Paragon, and listed huge payments gullible victims put on their credit cards and sent by wire transfers. After hearing it all, the judge asked him: “Are all those things true? Did you do those things and say those things?
“I did,” said Palazzolo.
“I’m here trying to make amends for what happened, and I’m trying to cooperate in every possible way that I can,” Palazzolo told the judge back then.
The stage seemed set for an easy sentencing process.
A pre-sentence report for Palazzolo, however, calculated an unexpectedly high sentencing range for him — much harsher than for his co-conspirators in the Paragon fraud, even before the government moved for a tougher sentence because of alleged new frauds.
James Gagliardini, the founding boss of Paragon,
in a U.S. prison in October; Michael Shumak, another founding partner,
in February.
Jack Kronis, a career conman who was a star salesman at Paragon after his long history in multiple frauds in several countries,
in November. Edward Rosenberg, another salesman,
last month.
Palazzolo seemed to be expecting similar treatment. Instead, the guideline range fell hard on him. The low end was calculated at 108 months, which is a stiff nine years in prison. The high end was 135 months, more than 11 years.
In his sentencing memo to the judge, filed before the aborted sentencing hearing, Palazzolo’s Cleveland lawyer, Michael Goldberg, complained of the disparity in sentencing guideline ranges for other members of the Paragon gang.
“Mr. Palazzolo has less culpability than several co-defendants who received sentences below Mr. Palazzolo’s guideline range,” Goldberg wrote.
“He was not an organizer or leader of the scheme. He is less culpable for the losses caused by the scheme than several co-defendants who received sentences below Mr. Palazzolo’s guideline range.”
Goldberg also said that Palazzolo accepts responsibility.
“He is remorseful for his actions. He understands that restitution will be part of his sentence, and intends to do everything he can to repay his victims for their losses,” Goldberg wrote.
Goldberg declined to comment to National Post when asked about his client not showing up at his sentencing hearing. So did the U.S. Attorney’s office and the FBI, citing the ongoing nature of the case.
There is no evidence that Palazzolo has returned to U.S. custody. No new information has been filed in court in his case.
Prosecutors said the amount of money swindled from Paragon’s victims attributed to Palazzolo was about US$1.5 million dollars.
U.S. court documents spell Palazzolo’s alleged company as Pavillion. There is a lawsuit filed in Ontario court that alleged a diamond investment fraud against Palazzolo and a company with a slightly different spelling,
Pavilion Diamonds International.
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