Two Missouri men admit to operating a long-running Ponzi scheme

Two Missouri men who claimed they were investing client funds in municipal bonds when they were actually using client money to bankroll lavish lifestyles have admitted to running a nearly 20-year Ponzi scheme, the U.S. Attorney’s Office for the Eastern District of Missouri announced Friday. 

With “dozens and dozens of victims” looking on, James “Jim” Johnson, 77, and Darrell Niswonger, 68, each pleaded guilty in U.S. District Court in Cape Girardeau to one count each of wire fraud, securities fraud and investment adviser fraud, the U.S. Attorney’s Office said in an Aug. 15 press release. Niswonger also pleaded guilty to four additional counts of wire fraud. 

Starting at least as early as 2006, Johnson and Niswonger engaged in a plan to defraud at least 90 victims of millions of dollars by falsely claiming that the victims’ money was being invested in municipal bonds when, in reality, the pair was running a scheme in which they used their victims’ money to pay themselves and previous victims, according to guilty plea agreements filed Aug. 15. 

“Johnson and Niswonger spent their victims’ money on their own personal expenses, including country club memberships, lavish improvements to Johnson’s personal residence, and private education for Niswonger’s son,” the plea agreements said. 

Using their victims’ money, Johnson and Niswonger paid themselves each $7,500 bi-weekly, the plea agreements said. 

The pair, who registered Johnson & Niswonger Financial Resources with the Missouri Secretary of State in 2002, operated the firm from a storefront located in Perryville. Initially, the pair offered clients annuities issued by legitimate companies. 

However, at least as early as 2006, the firm began experiencing cash flow difficulties, according to the plea agreements. Johnson and Niswonger discussed offering a “five-year investment” that they would market as a replacement for certificates of deposit. The pair agreed to refer to the investments as “municipal bonds,” the plea agreements said.

Over the scheme’s life, the pair took from their victims a sum calculated to be more than $6 million by falsely claiming that they would invest the victims’ money in municipal bonds, the plea agreements said. Johnson and Niswonger persuaded the victims to invest by falsely assuring them that there was no risk associated with the investment, their money was secure and that the alleged muni bonds were insured by the Federal Deposit Insurance Corporation. 

“None of those statements was true,” the plea agreements said. 

While the pair fully repaid a few of their investors, they used money from other investors to do so, the plea agreements said. Dozens of their victims received no repayments at all on their alleged investments while dozens more only received nominal payments. 

When their firm ceased operations on April 22, 2025, it owed investors more than $3 million but had less than $22,000 in the operating account into which the victims’ money had been deposited, according to the agreements.

Johnson and Niswonger are set to be sentenced on Nov. 13, the press release said. 

“Wire fraud is punishable by up to 20 years in prison, a $250,000 fine or both prison and a fine, the release said. “Securities fraud is punishable by up to 20 years in prison and a $5 million fine and investment adviser fraud is punishable by up to five years in prison and a $10,000 fine.” 

The release also said that as of their plea agreements, Johnson and Niswonger have agreed to “forfeit Johnson’s home, a 2019 Audi A5 Premium as well as $61,734 in two bank accounts and $10,302 in a brokerage account.”