You are here: Home / News / News Releases / USDOJ

INDICTMENT CHARGES JAILED JOHNSTON MAN WITH CONNING AN INVENTOR AND DEFRAUDING INVESTORS

March 24, 2009 By Paul (Founder, WorkAtHomeTruth) 3 Comments

3/13/2009 U.S. Department of Justice News Release:

A federal grand jury has charged Rocco DeSimone, of Johnston, with conning an inventor and defrauding investors with fraudulent claims about marketing three inventions.  DeSimone, who is about to complete a federal prison term for tax fraud, escaped from a minimum security facility in New Jersey in March 2008 after he learned that federal agents had executed a search warrant at his Johnston home.  He surrendered in Rhode Island three days later.

United States Attorney Robert Clark Corrente, Warren T. Bamford, Special Agent in Charge of the Federal Bureau of Investigation, and Susan Dukes, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation, jointly announced a ten-count indictment charging DeSimone with mail fraud and money laundering.  The indictment was returned on March 11 in U.S. District Court, Providence.
Disk Shield, Drink Stik, Song Tube.

According to the indictment, DeSimone’s scheme involved the marketing of three inventions developed by two inventors.  One inventor developed the “Disk Shield” in 2006 as a protective shield for compact discs and DVDs.  In 2005, another inventor, who is also a physician, patented the “Drink Stik,” designed to allow individuals wearing protective gear to drink fluids without first having to remove the protective gear.  In 2006, the physician-inventor developed the “Song Tube,” designed as an improved version of a gastrointestinal medical tube.

According to the indictment, DeSimone falsely represented to the Drink Stik inventor that he personally knew the Chief Executive Officer of Fidelity Investments and claimed that the CEO had agreed to purchase the Drink Stik for millions of dollars.  In fact, according to the indictment, DeSimone had never met or even spoken with the Fidelity CEO.  DeSimone allegedly used this and other ruses to con the inventor into giving him part ownership of the company marketing the Drink Stik.

According to the indictment, DeSimone falsely represented to potential investors that Fidelity, Raytheon and/or Tyco International had offered to purchase the rights to the Drink Stik for millions of dollars.  DeSimone subsequently provided false explanations to investors concerning purported delays in receiving funds from Fidelity, Raytheon and Tyco, claiming, for instance, that the deals were delayed in company bureaucracy.

DeSimone allegedly obtained from investors in the Drink Stik about $1.2 million in funds and $4.9 million in other property and forgiven debts.  Among the property he allegedly obtained were expensive pieces of art and valuable Japanese artifacts.

According to the indictment, DeSimone convinced the physician-inventor that he could successfully market the Song Tube gastrointestinal device in exchange for an ownership interest in the Song Tube.  The inventor subsequently assigned the Song Tube patent to a company in which DeSimone had a 34 percent ownership.

The indictment alleges that DeSimone solicited investments in the Disk Shield by falsely representing that he owned the right to market it.  According to the indictment, DeSimone had no ownership interest in the Disk Shield and no authority to solicit investments.  DeSimone allegedly represented that Nintendo, Inc. and SONY Records, Inc. had offered millions of dollars for the Disk Shield, when neither company had made such an offer, according to the indictment.

According to the indictment, DeSimone made several false representations about the Drink Stik and Song Tube marketing campaigns to a California investor, who subsequently wired about $500,000 to a bank account held in the name of Rocco DeSimone’s wife.

The indictment charges DeSimone with nine counts of mail fraud.  It also charges him with money laundering for allegedly using about $180,000 of the money sent by the California investor to buy a Fort GT automobile.

An indictment is merely an allegation and a defendant is presumed innocent unless and until proven guilty.  In the event of a conviction, the maximum penalty for mail fraud is 20 years in prison and a $250,000 fine.  The maximum penalty for money laundering is ten years in prison and a fine of $250,000 or twice the amount of gain or loss.

The indictment also seeks the forfeiture of money and other assets that DeSimone allegedly derived from the scheme.  Among the assets:  motor vehicles, nine Japanese swords, and a 1915 painting by Pierre-August Renoir entitled “Paysage a’ Cagnes.”

DeSimone, 55, who is scheduled to be released from prison on March 21, is to be brought into U.S. District Court, Providence on Friday, March 20, to be arraigned on the indictment.

The Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation, conducted the investigation.  Assistant U.S. Attorneys Lee H. Vilker and John P. McAdams are prosecuting the case.

Filed Under: FBI Releases, USDOJ Tagged With: ,

Folsom Man Pleads Guilty to Operating Ponzi Scheme

March 24, 2009 By Paul (Founder, WorkAtHomeTruth) Leave a Comment

3/17/2009 U.S. Department of Justice Press Release:

SACRAMENTO: Acting United States Attorney Lawrence G. Brown announced today that STEFAN WILSON, aka Steve Wilson, 45, of Folsom, has pleaded guilty to wire fraud and income tax evasion in connection with a fraudulent investment scheme which he conducted under the name CIC Investment Fund.  The guilty plea was entered before Senior United States District Judge Lawrence K. Karlton.

This case was investigated by the FBI and IRS Criminal Investigations.

According to the indictment, which was filed in March, 2008, WILSON raked in approximately $13 million from investors over a two year period.  In the plea agreement, WILSON admitted that he was able to collect this money by making false and fraudulent statements to investors.  Among other things, WILSON told investors that he had a long and successful history of investing in the stock market; that he could promise an 18-24% return whether the market was good or bad; and that he was aware that other promoters of the Fund were claiming that there was a reserve fund such that were the CIC Fund to sustain losses, there would still be sufficient funds to pay the promised return for up to three years.  In fact, WILSON did not have the track record of successful investing that he claimed, nor a reserve fund.

Many of the investors were encouraged to refinance their homes or use their life savings to come up with the $100,000 minimum investment that WILSON required to invest in the Fund.  As a result, many of WILSON’s victims have lost their homes or have been forced to come out of retirement and search for work in an uncertain economy.

According to other documents filed in the case, although WILSON placed approximately $6.5 million of investor funds into a brokerage account, he lost virtually all of it in bad stock trades.  Then, despite these staggering losses, WILSON continued to represent to investors that the fund was doing well and caused monthly statements and checks to be sent to investors showing that they were receiving the promised return, even after the CIC Fund lost 99.42% of its value.

The remainder of the investor money was left in a bank account that WILSON used to make lulling payments to investors and to pay for a lavish lifestyle, including a $400,000 down payment on his personal residence in Folsom and a $118,000 down payment on a Lamborghini.  Because WILSON did not declare any of this income on his 2006 tax return, he also pled guilty to filing a false income tax return for that year.

Acting U.S. Attorney Brown said: “The devastation that Wilson wreaked on hardworking people is heartbreaking and demonstrates why white collar crime has such a huge impact on the community.  Thanks to a thorough and timely investigation by the FBI and IRS, Wilson was stopped before he could do even more damage.”

Based on his plea, Wilson faces a maximum penalty of 23 years in prison.  Under the terms of the plea agreement, the United States is free to recommend any term of imprisonment up to the maximum.  According to Assistant U.S. Attorney R. Steven Lapham and Russell Carlberg, who are prosecuting the case, because of the devastating effect on the victims, they intend to ask the court for a very lengthy sentence.  However, the actual sentence will be determined at the discretion of the court after consideration of the Federal Sentencing Guidelines, which take into account a number of variables, and any applicable statutory sentencing factors.

Judge Karlton scheduled the matter for Judgment and Sentencing on May 27, 2009.

Filed Under: FBI Releases, USDOJ Tagged With: , , , , ,

ATLANTA CURRENCY TRADER CHARGED WITH OPERATING $25 MILLION PONZI SCHEME

March 24, 2009 By Paul (Founder, WorkAtHomeTruth) Leave a Comment

3/18/2009 U.S. Department of Justice News Release via the FBI Website:

ATLANTA CURRENCY TRADER CHARGED WITH OPERATING $25 MILLION PONZI SCHEME

James G. Ossie’s Scheme Allegedly Defrauded Over 120 Investors In Just 9 Months

Atlanta, GA—JAMES G. OSSIE, 49, of Atlanta, the founder and principal of an Alpharetta, Georgia-based currency trading firm, “CRE Capital, Inc.,” has been indicted by a federal grand jury on 10 counts of wire fraud. OSSIE is scheduled to surrender in federal court on Friday, March 20, 2009, for an initial appearance, bond hearing, and arraignment.

United States Attorney David E. Nahmias said, “This indictment alleges yet another disturbing Ponzi scheme with a similar result: many victims lose a lot of their hard-earned money in a short amount of time. These fraudulent schemes rely on attracting investors who are willing to believe in claims that are too good to be true. These cases are getting a lot of attention for a reason. They are major investment fraud schemes, and the masterminds are finding themselves arrested and facing serious charges and prison time.”

According to United States Attorney Nahmias, the indictment and other information presented in court: OSSIE and CRE Capital operated an investment fund for private clients focused on options contracts in foreign currencies.  The fund operated from approximately April 2008 into January 2009, when it was shut down by the United States Securities and Exchange Commission (“SEC”).

OSSIE and CRE offered investment contracts, in amounts of at least $100,000, that guaranteed the return of an investor’s deposit plus 10% interest within just 30 days.  OSSIE claimed to be able to pay such substantial monthly returns because he typically made even more than that through his trading activity.  OSSIE also claimed that his trading profits allowed him to fund a substantial cash “reserve fund” sufficient to re-pay all investors their deposit plus 10% monthly profit, in case the market deteriorated.  OSSIE claimed that CRE Capital even hired outside accountants, or auditors, who reviewed and confirmed the accuracy of the numbers. The indictment also alleges that although CRE hired outside accountants for limited projects, OSSIE did not allow any access to the records of the trading accounts that would have revealed his substantial losses.

OSSIE made these representations directly to individual investors, through salespersons known as “correspondents,” through the CRE Capital website, and in numerous mass conference calls involving groups of investors and prospective investors.

However, the indictment alleges that these representations were all lies.  Instead of making profits sufficient to pay 10% monthly returns and fund a “reserve” account, the indictment alleges that OSSIE lost millions of dollars. Just during CRE’s 9-month lifespan, the firm lost over $12 million in its foreign currency trading accounts. The indictment alleges that there was no “reserve” account sufficient to repay investors. By the end of 2008, CRE owed over $23 million in pending investment contracts but only had just over $2 million deposited in all of its bank and trading accounts combined.

Because he was making no profits, OSSIE was only able to re-pay investors their deposits and guaranteed 10% returns through what is referred to as a “Ponzi” scheme.  Specifically, OSSIE allegedly paid his debts to existing investors with money recently invested by new investors.  When the time came to pay the returns promised to the new investors, OSSIE would recruit more investments from still newer investors.  This unsustainable scheme was identified and shut down by the SEC in January 2009.  In the meantime, OSSIE had raised over $25 million from over 120 investors, approximately half of which was lost in unsuccessful currency trading.

United States Attorney Nahmias and the FBI noted that this investigation remains ongoing.

Members of the public are reminded that the indictment contains only allegations.  A defendant is presumed innocent of the charges and it will be the government’s burden to prove a defendant’s guilt beyond a reasonable doubt at trial.

This case is being investigated by Special Agents of the Federal Bureau of Investigation.

Assistant United States Attorneys Justin S. Anand and Douglas W. Gilfillan are prosecuting the case.

For further information please contact David E. Nahmias (pronounced NAH-me-us), United States Attorney, or Charysse L. Alexander, Executive Assistant United States Attorney, through Patrick Crosby, Public Affairs Officer, U.S. Attorney’s Office, at (404) 581-6016.  The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is www.usdoj.gov/usao/gan.

Filed Under: FBI Releases, USDOJ Tagged With: , , ,
« Older Posts
Newer Posts »