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Tuesday, December 31, 2013

U.S. Customs and Border Protection Officer Convicted of Corruption

FBI San Diego Division News Release:

U.S. Customs and Border Protection Officer Convicted of Corruption

U.S. Attorney’s OfficeDecember 20, 2013
  • Southern District of California(619) 557-5610
A veteran U.S. Customs and Border Protection officer was convicted by a federal jury today of allowing tons of marijuana and loads of people to be smuggled through his inspection lanes.
After a two-week trial before U.S. District Judge Marilyn Huff, the jury deliberated for five days and found 50-year-old Lorne “Hammer” Jones guilty of conspiracy to engage in bribery, drug smuggling, and alien smuggling and attempted importation of marijuana. Sentencing was set for March 24, 2014 at 9 a.m.
According to testimony at trial, Jones was on the take for a decade beginning in 2000, first waving cars and vanloads of aliens and drugs through his lane at the San Ysidro port of entry, and eventually graduating to tractor-trailers jammed with marijuana at the commercial port at Otay Mesa.
“Lorne Jones allowed greed to destroy everything his badge represents,” said U.S. Attorney Laura Duffy. “This verdict ensures that he will held accountable with his actions.”
“Today’s conviction is important to all of the other hardworking CBP employees and officers who perform their duties with honor and distinction, working tirelessly every day to keep our country safe,” said Pete Flores, CBP Director of Field Operations in San Diego. “We do not tolerate corruption within our ranks; the actions uncovered during this investigation tarnish the badge he was privileged to wear.”
FBI Special Agent in Charge (SAC) Daphne Hearn commented, “When a law enforcement official violates his oath to protect and serve the citizens of this nation, it undermines the public’s trust. When that happens, the FBI and our law enforcement partners at the Border Corruption Task Force are determined to restore the public’s confidence and trust by rooting out corruption at all levels of government.” The public can report alleged instances of corruption to the FBI hotline at 858-320-1800.
“I am pleased by today’s verdict,” said Dennis M. McGunagle, Special Agent in Charge of Department of Homeland Security, Office of Inspector General. “The DHS OIG is committed to working with our law enforcement partners to identify and aggressively investigate allegations of corruption to protect our borders and the integrity of DHS personnel, programs, and operations.”
Jones, an inspector since 1994, worked at both the San Ysidro and Otay Mesa border crossings and had been a canine officer since the 1990s. He was indicted by a federal grand jury and arrested at work in 2010, charged with conspiracy to commit bribery and smuggle drugs and immigrants, as well as bribery and attempted marijuana importation. Jones was acquitted of bribery.
A dozen witnesses testified that Jones was on the take, including Michael Taylor, a former colleague and friend of Jones’ who was also corrupt; Jones’ ex-wife, who recruited him to be a smuggler; a friend and financial adviser who testified that the two had discussed ways to hide ill-gotten gains and that he had personally used Jones to help smuggle his girlfriend across the border twice; the smuggled girlfriend; and some of Jones’ co-conspirators.
And, prosecutors presented evidence from a database that tracks information about people crossing the border—such as license plate numbers, names of those who were inspected and when, and by whom. During trial, prosecutors said the data proved that Jones was allowing known load vehicles and drivers for drug trafficking organizations to pass though his lanes for years, without being inspected.
According to testimony, Jones volunteered to work overtime shifts as a primary inspector so he could wave through vans jammed with aliens and drugs, and trucks full of marijuana. But things did not go smoothly on two occasions.
According to trial testimony, Jones had a beeper code system to tell smugglers which one of the 24 inspection lanes Jones was working when they approached the border crossing. But the system failed in 2002 when Jones was randomly and unexpectedly reassigned to another position, and a load driver was forced to abandon his van full of drugs in the inspection line.
In the second failure a few months later, a van stuffed to the ceiling with four tons of marijuana was detected by a roving officer and his dog. The van was in Jones’ lane, just car lengths away from Jones’ booth as he furiously waved other drivers through the lane. The driver and passenger ran from the van, and all the inspectors hurried to help—except Jones.
“Where was Hammer?” prosecutor W. Mark Conover said during his closing argument. “Sitting in his booth, paralyzed with fear. His load was caught.”
That narcotics seizure remains the largest ever at San Ysidro.
One of the government’s key witnesses was Taylor, the former inspector and friend of Jones who had been indicted in 2004, convicted of corruption-related charges and had served 48 months in prison. He has since graduated from Columbia University with honors and is now an archeologist with no legal incentive to lie, prosecutors told the jury. Taylor testified that he and Jones were both smuggling aliens and drugs in the early 2000s.
According to trial testimony, security was tightened at the ports of entry around 2007, making it more difficult for Jones to singlehandedly allow loads of drugs and people through. That meant more losses of large loads of marijuana.
Criminal Case No. 10cr4141
Defendant
Lorne Leslie Jones aka “Hammer”
Age: 50
Chula Vista, CA
Summary of Charges
Conspiracy to Commit Crimes Against the United States in violation of 18 U.S.C. 371 Attempted Importation of Marijuana in violation of 21 U.S.C. 841
Investigating Agencies
  • Federal Bureau of Investigation, Border Corruption Task Force
  • Department of Homeland Security, Office of Inspector General
  • Customs and Border Protection, Office of Field Operations

Owner of Stock Lending Firm Convicted by Jury in $100 Million Stock Loan Fraud Scheme

FBI San Diego Division Press Release:

Owner of Stock Lending Firm Convicted by Jury in $100 Million Stock Loan Fraud Scheme

U.S. Attorney’s OfficeDecember 20, 2013
  • Southern District of California(619) 557-5610
SAN DIEGO—Jeffrey Spanier, a 48-year-old former owner of Amerifund Capital Finance, LLC located in Boca Raton, Florida, was convicted by a federal jury today for his role in an elaborate stock loan fraud scheme in which executives and shareholders of publicly traded corporations collectively lost over $100 million when the stock they pledged as collateral for loans was immediately sold in order to fund the loans.
After a two-week trial before U.S. District Judge Roger T. Benitez, the jury deliberated for just one and a half days and found Spanier guilty on all 19 counts, which included conspiracy, mail and wire fraud, and securities fraud.
During the trial, the government offered testimony from several executives, many of whom had faithfully paid off their loans over a period of years, completely unaware that their stocks had been sold. All testified of the frustration, emotional stress, and grief they experienced when they unsuccessfully attempted to recover their stock once the loan balance was paid, and ultimately realized they were the victims of a massive fraud. Victims came from the United States as well as Canada, Mexico, China, Hong Kong, and the Netherlands.
Following a lengthy investigation conducted by the Federal Bureau of Investigation (FBI), Spanier was indicted on April 13, 2012, along with Douglas McClain, Jr. and James Miceli. All were charged with multiple counts of conspiracy, mail fraud, wire fraud, securities fraud, and money laundering. On May 31, 2013, a federal jury returned guilty verdicts on all counts in the indictment against McClain. Miceli committed suicide shortly before that trial.
McClain, president of Argyll Equities, Inc., was sentenced in September to 15 years in prison and ordered to pay $81,731,879.98 in restitution.
According to the evidence presented at Spanier’s trial, beginning in at least 2003, he conspired with McClain and Miceli to defraud the public and borrowers by falsely representing that San Diego-based Argyll Equities, LLC was an institutional lender with significant cash to lend to corporate executives and other individuals.
According to trial testimony, Spanier, through his entity Amerifund Capital Finance, partnered with McClain, Miceli, and Argyll Equities, and together with his partners fraudulently induced corporate executives to pledge millions of dollars worth of stock the executives held in publicly traded companies as collateral for loans by falsely representing that the borrowers' stock would not be sold unless there was a default on the loan.
The evidence presented at trial showed that Argyll, the purported lender, had no cash to lend and instead survived for years by quickly selling borrowers’ stock after it was pledged as collateral. The proceeds from the sale of the stock were used to fund the loans creating the appearance that Argyll had plenty of cash to lend.
The evidence also showed that Spanier, McClain, and others fraudulently induced the borrowers to make monthly interest payments on their loans by falsely representing that their collateral was safe and would be returned as long as they did not default. At the end of the loan terms, the borrowers paid off their loans. Instead of returning the stock to the borrowers, Spanier and McClain kept the money and provided false excuses about why they could not return their stock.
The evidence further showed that the unauthorized sales of stock held by insiders of publicly traded companies caused the stock price to fall which defrauded purchasers of these publicly traded securities who purchased stock through public stock exchanges.
The jury rejected defense claims that Spanier was merely a broker who was unaware of the fraud scheme.
“Because of dedicated investigators and prosecutors, this verdict means the defendant will be held accountable for such a brazen and destructive scheme,” said U.S. Attorney Laura Duffy.
“This case demonstrates the FBI’s continued commitment to aggressively pursue those who would defraud the public through deceit and false claims,” said FBI Special Agent in Charge Daphne Hearn. “The FBI will aggressively pursue those who line their pockets at the public’s expense.”
Criminal Case No. 12cr0918BEN
Defendant
Jeffrey Spanier, 48, Florida
Summary of Charges
  • Count 1: Conspiracy (Title 18, United States Code, Section 371):
  • Counts 2-7: Mail Fraud (Title 18, United States Code, Section 1341
  • Counts 8-18: Wire Fraud (Title 18, United States Code, Section 1343)
  • Count 19: Securities Fraud (Title 15, United States Code, Sections 78j(b) and 78ff)
Investigating Agency
Federal Bureau of Investigation

Interstate Stalking Defendant Sentenced to Five Years in Prison

FBI San Diego Division Press Release:

Interstate Stalking Defendant Sentenced to Five Years in Prison

U.S. Attorney’s OfficeDecember 20, 2013
  • Southern District of California(619) 557-5610
Brian Curtis Hile, a 30-year-old resident of Fremont, Michigan, was sentenced today to the statutory maximum of 60 months in custody for traveling across the country to San Diego to kill two people.
Hile was convicted after a jury trial in August of two counts of interstate stalking. According to court records, Hile traveled to San Diego from Michigan in August 2011 with the intent to kill a female victim and her live-in boyfriend.
Prior to traveling from Michigan to San Diego, Hile engaged in a romantic online relationship with someone he believed to be a woman. During the course of that online relationship, which spanned a couple of years, Hile exchanged romantic communications and explicit photographs.
However, when Hile learned that his online paramour was in fact a man residing in South Africa and that his romance was nothing more than a catfishing scheme, Hile became enraged and initiated what he termed “an investigation” to find the woman in the photographs.
As part of his investigation to identify his targets, Hile conducted an extensive search of the Internet, utilizing chat rooms and online gaming blogs to identify and locate the woman in the photographs. That woman is a resident of San Diego County, who years earlier had her online Photo Bucket account compromised, resulting in her photographs being disseminated over the Internet.
As a result of his diligent research efforts, Hile not only identified the woman in the photographs, but obtained personal information about her as well as her live-in boyfriend, the victims’ family members, and friends. Hile was arrested in San Diego within miles of the victims’ home, after admitting to a family member that he had already been to the victims’ residence but the victims were not home at the time.
At the time of his arrest, Hile was in possession of the victims’ address, telephone numbers, e-mail addresses, telephone contacts, contact information for the victims’ favorite restaurant, and the names and addresses for educational institutions that the victims had previously attended. Forensic evidence showed that Hile retrieved the victims’ confidential information by hacking into the victims’ e-mail accounts. Hile was also found in possession of duct tape, zip ties, and a to-do list that included additional supplies he needed to complete his plan to kill the two victims, including a trench coat, knife, and chloroform.
During the sentencing hearing, one of the victims informed the court that even after two years, she still has nightmares on a regular basis that someone is trying to kill her and that she is too afraid to put her name on anything for fear that Hile will find her and her family again.
U.S. District Judge Janis L. Sammartino pronounced the sentence of 60 months’ custody followed by three years of supervised release and ordered Hile to stay away from the victims and the victims’ families and friends.
United States Attorney Laura Duffy said, “Interstate stalkers who intend to harm members of our community will not be tolerated. We would like to thank the Federal Bureau of Investigation, El Cajon Police Department, and San Diego County Sheriff’s Office for their investigation and support of the prosecution of this dangerous individual.”
Criminal Case No. 12CR1687-JLS
Defendant
Brian Curtis Hile 30 Fremont, Michigan
Summary of Charges
Interstate stalking, in violation of Title 18, United States Code, Section 2261A(1).
Investigating Agencies
  • Federal Bureau of Investigation
  • El Cajon Police Department
  • San Diego County Sheriff’s Office

Third Defendant Sentenced in Murder of U.S. Border Patrol Agent Robert Rosas

FBI San Diego Division Press Release:

Third Defendant Sentenced in Murder of U.S. Border Patrol Agent Robert Rosas

U.S. Attorney’s OfficeDecember 19, 2013
  • Southern District of California(619) 557-5610
SAN DIEGO—Jose Luis Ramirez-Dorantes was sentenced today to 55 years in prison for his participation in the July 2009 robbery and murder of United States Border Patrol Agent Robert Rosas, Jr.
Ramirez, a 46-year-old Mexican national, pleaded guilty on January 10, 2013, admitting he was one of five armed individuals who conspired to rob a U.S. Border Patrol agent of his night vision device, which resulted in Agent Rosas being fatally shot during a struggle. Ramirez pleaded guilty to conspiracy to commit robbery and kidnaping and use and carrying of a firearm during the commission of a crime of violence.
Court filings indicate that in July 2009, Ramirez and four others plotted to rob a Border Patrol agent of his night vision device. On July 23, 2009, the group, bearing firearms, traveled by car and foot to the international border near Campo, California. Ramirez stood watch on the Mexican side of the border while three co-conspirators sneaked into the United States at night and waited for a Border Patrol agent to arrive in the area. After Agent Rosas arrived in the area and exited his vehicle, he was detained at gunpoint. Agent Rosas resisted, and, during the ensuing struggle, Ramirez’s co-conspirators shot Agent Rosas multiple times, killing him. The co-conspirators then stole the agent’s firearm, night vision device, and other equipment and fled back to Mexico.
In June 2010, Mexican officials arrested Ramirez in Naucalpan, Mexico, near Mexico City, at the request of the United States. Ramirez was extradited to the United States in December 2010.
Ramirez is the third defendant to be sentenced for Agent Rosas’ murder. In April 2010, United States District Judge M. James Lorenz sentenced Christian Daniel Castro-Alvarez to 40 years of imprisonment. On November 14, 2013, he sentenced Marcos Rodriguez-Perez to 56 years to run consecutive to a two-year sentence Rodriguez is currently serving for violating his supervised release from a prior alien smuggling conviction. One other defendant, Emilio Samyn Gonzales-Arenazas, has pleaded guilty to participating in the murder and is scheduled to be sentenced on January 23, 2014. The last defendant, Jose Juan Chacon-Morales, remains a fugitive, and there is a reward of up to $100,000 for information leading to his arrest or location.
After Ramirez’s sentencing, United States Attorney Laura E. Duffy expressed her condolences to Agent Rosas’s family and colleagues at the Border Patrol: “We hope that in some small way, these successful prosecutions can make a difference to members of the Rosas family who have suffered such a tragic, irreparable loss. Ramirez and the others will pay a high price for their unconscionable actions that terrible night.”
Duffy also expressed her gratitude to the Federal Bureau of Investigation and Homeland Security Investigations who conducted the investigation. “Since July 2009, the investigating agents have displayed exceptional diligence and tenacity to bring these four men to justice, despite the length and complexity of this cross-border investigation. The expertise and resolve of the agents in this case demonstrate that if a law enforcement officer is harmed in any way, the United States will dedicate its full resources to catching the perpetrators and bringing them to justice.”
Chief Patrol Agent Paul A. Beeson of the U.S. Border Patrol’s San Diego Sector said, “On behalf of all Border Patrol agents, we extend our deepest appreciation for the resolve and professionalism of the U.S. Attorney’s Office for their work on the prior convictions and this sentencing. We will always remember Border Patrol Agent Robert Rosas as a good father, loving husband, and a patriot to his country.”
FBI Special Agent in Charge Daphne Hearn commented, "Today’s sentencing sends a message that the FBI is committed to bringing to justice those responsible for the death of U.S. Border Patrol Agent Robert Rosas. Agent Rosas served his country with dedication, honor, and courage and was killed while protecting our nation’s borders. The FBI recognizes that no punishment will lessen Agent Rosas' death, but we hope today’s sentencing will help bring some closure to the family.”
Defendant in Criminal Case No. 10CR1793-L
Jose Luis Ramirez-Dorantes
Age: 45
Mexico
Summary of Charges
Count one: Title 18, United States Code, Section 371: Conspiracy to commit robbery and kidnaping
Count five: Title 18, United States Code, Section 924(c)(1): Discharging firearms during and in relation to a crime of violence
Investigating Agencies
Federal Bureau of Investigation
Homeland Security Investigations



FBI and San Diego Police Department Seek Public's Assistance to Identify Chase Bank Robber

FBI San Diego Division Press Release:

FBI and San Diego Police Department Seek Public's Assistance to Identify Chase Bank Robber

FBI San DiegoDecember 19, 2013
  • Darrell Foxworth(858) 320-8302
The FBI and San Diego Police Department are seeking the public’s assistance to identify the unknown male responsible for robbing the Chase Bank branch located at 6116 Mission Gorge Road in San Diego, California, on Thursday, December 19, 2013.
On Thursday, December 19, 2013, at approximately 6:30 p.m., the Chase Bank branch located at 6116 Mission Gorge Roadin San Diego, California, was robbed by an unknown male. At the time of the robbery, the unknown male entered the bank shouting that he was there to rob the bank. The robber waved his arms in the air while shouting and demanding money from the bank tellers. The robber shouted “this is a holdup” several times, pointing his hand and simulating a weapon. The robber threatened bank employees and customers throughout the time he was in the bank. After receiving an undisclosed amount of money from two tellers, the robber exited the bank. No injuries were reported and no vehicle was observed.
Witnesses describe the robber as follows:
  • Sex: Male
  • Race: Asian or Hispanic
  • Hair: Dark
  • Eyes: Brown
  • Age: Late 20s
  • Clothing: Red- or maroon-colored baseball cap with the letter H on front, dark jacket, dark pants, dark gloves with fingertips of glove cutoff
Bank surveillance photographs from the Chase Bank, 6116 Mission Gorge Road, San Diego, California, on Thursday, December 19, 2013:
sd121913_1_s1.jpg
sd121913_2_s1.jpg
sd121913_3_s1.jpg
Anyone with information about this robbery is asked to contact the FBI at telephone number (858) 320-1800 or Crime Stoppers at (888) 540-8477.

FBI and San Diego Sheriff’s Department Seek Public’s Assistance to Identify U.S. Bank Robber

FBI San Diego Division News Release:

FBI and San Diego Sheriff’s Department Seek Public’s Assistance to Identify U.S. Bank Robber

FBI San DiegoDecember 19, 2013
  • Darrell Foxworth(858) 320-8302
The FBI and San Diego Sheriff’s Department are seeking the public’s assistance to identify the unknown male responsible for robbing the U.S. Bank branch located at 1301 East Vista Way in Vista, California, on Thursday, December 19, 2013.
On Thursday, December 19, 2013, at approximately 1:53 p.m., the U.S. Bank branch located at 1301 East Vista Way in Vista, California, was robbed by an unknown male.
At the time of the robbery, the unknown male entered the bank, approached the victim teller, and made a verbal demand for money in specific denominations. Upon receiving a sum of money the unknown male exited the bank. No injuries were reported.
Witnesses describe the robber as follows:
  • Sex: Male
  • Race: Hispanic
  • Height: Approximately 5’6” tall
  • Weight: Approximately 200 pounds
  • Age: Mid-20s
  • Clothing: Black rim glasses, gray baseball cap with Batman logo, dark pants, and gray scarf covering face
Bank surveillance photographs from the U.S. Bank, located at 1301 East Vista Way, Vista, California, on Thursday, December 19, 2013:
 
  
Anyone with information about this robbery is asked to contact the FBI at telephone number (858) 320-1800 or Crime Stoppers at (888) 540-8477.

FBI and San Diego Police Department Seek Public’s Assistance to Identify Woman Who Tried to Rob Bank

FBI San Diego Division News Release:

FBI and San Diego Police Department Seek Public’s Assistance to Identify Woman Who Tried to Rob Bank

U.S. Attorney’s OfficeDecember 16, 2013
  • Darrell Foxworth(858) 320-8302
The FBI and San Diego Police Department are seeking the public’s assistance to identify the unknown female who attempted to rob the Bank of America branch located at 455 Island Avenue in San Diego, California, on Monday, December 16, 2013.
On Monday, December 16, 2013, at approximately 9:00 a.m., an unknown female attempted to rob the Bank of America branch located at 455 Island Avenue in San Diego, California. The unknown female entered the bank shortly after it opened and approached the victim teller who was standing behind a protective glass window. The suspect handed the teller a demand note, demanding cash and threatening to possess a weapon. The teller took the note and alerted another bank employee of what was happening. Both employees walked away from the window to another location within the bank. The suspect subsequently walked out of the bank without any money. No injuries were reported and no weapon observed.
Witnesses describe the robber as follows:
  • Sex: Female
  • Race: Filipino
  • Age: Late 30s to early 40s
  • Height: Approximately 5’4” to 5’6” tall
  • Weight: Approximately 140 pounds
  • Hair: Black
  • Clothing: Black sunglasses, light green sweater with horizontal white stripes, light green shell blouse, brown pants, black shoes, and tan purse
Bank surveillance photographs from the Bank of America, located at 455 Island Avenue in San Diego, California, on Monday, December 16, 2013:
  
Anyone with information concerning this robbery is asked to contact the FBI at telephone number (858) 320-1800 or Crime Stoppers at (888) 540-8477.

Leader of San Diego Mortage Company Sentenced to 41 Months in Prison and Ordered to Pay More Than $500,000 in Restitution

FBI San Diego Division News Release:

Leader of San Diego Mortage Company Sentenced to 41 Months in Prison and Ordered to Pay More Than $500,000 in Restitution

U.S. Attorney’s OfficeDecember 16, 2013
  • Southern District of California(619) 557-5610
Today United States Attorney Laura E. Duffy announced the sentencing of Brian Nels Peterson, the head of a mortgage company called Terra Finance in San Diego, California, for originating millions of dollars in fraudulent mortgage applications generated between 2005 and 2007, many for properties in two neighborhoods in San Diego County. District Court Judge John A. Houston sentenced Peterson today to 41 months in custody, ordered him to pay a $50,000 fine, and ordered restitution in the amount of $542,075 to Citi Mortgage.
Peterson admitted that he devised a scheme to procure mortgage funds through deceptive means, including falsifying income on applications to qualify borrowers for loans. Terra Finance facilitated loans in several San Diego neighborhoods, including the expensive then-new Ivy Gate housing development in North County’s 4S Ranch and the Rolling Hills development in southern San Diego County. Court documents indicate that in its heyday, Terra Finance generated between $80 million and $100 million worth of residential mortgage loans. Peterson, who held a broker’s license with the California Department of Real Estate, personally signed most of the fraudulent loan applications containing false income, employment, asset, and liability information submitted under his license number.
Peterson earned over $1 million from his fraudulent loan business through broker’s fees, kickbacks from cash-out refinances, and other sources in 2006 alone. He admitted that he failed to report his over $1 million income in 2006 and that he evaded paying taxes by arranging to be paid in cash and other means.
According to court documents, Peterson orchestrated the fraudulent conduct of employees, borrowers, and industry professionals as the head of Terra Finance. Peterson recruited a cadre of loan officers, loan processors, office staff, real estate “investors,” and other industry professionals to participate in his scheme, including appraisers, tax preparers, and lender representatives. These knowing participants included people who made up job titles and income figures so borrowers would appear to qualify for a loan, added borrowers to another person’s bank account, and then had the borrowers falsely claim the funds in the account as assets, fabricated false “verifications” of phony information in the loan applications, and prepared appraisals “to order” based on the property value Peterson sought. Borrowers used a succession of fake loan applications to purchase multiple properties that they could not afford. The initial loans were often re-financed—through fraudulent loan applications—to fund additional purchases in an upward spiral of home ownership built on a foundation of fraud.
Peterson’s real estate empire eventually crumbled, resulting in millions of dollars of losses, dozens of foreclosures, numerous neighborhoods depressed—and the indictment of 26 loan officers, loan processors, appraisers, borrowers, and a lender representative, all who participated in loans with Terra Finance. In a related case, United States v. Berkenfield, case number 11CR3486-JAH, 13 out of 25 arrested defendants have pled guilty and have been sentenced to penalties ranging from probation and home confinement to five months in custody. Twelve defendants remain pending in that case. (One defendant remains a fugitive.)
Defendant Criminal Case No. 11CR3486-JAH: 
Brian Nels Peterson
Count one: wire fraud (Title 18, United States Code, § 1343): 41 months custody; three years of supervised release; $50,000 fine; $542,075 restitution; $100 special assessment.
Count two: willful failure to file tax return (Title 26, United States Code, § 7203): 12 months custody; one year of supervised release, $10 special assessment, all to run concurrently with count one.
Participating Agencies:
  • Department of Homeland Security, Immigration and Customs Enforcement, Office of Professional Responsibility
  • Internal Revenue Service-Criminal Investigations
  • Federal Bureau of Investigation

CEO Sentenced to 30 Months in $2.5 Million Securities Fraud Involving Florida Software Company

FBI San Diego Division News Release:

CEO Sentenced to 30 Months in $2.5 Million Securities Fraud Involving Florida Software Company

U.S. Attorney’s OfficeDecember 16, 2013
  • Southern District of California(619) 557-5610
SAN DIEGO, CA—United States Attorney Laura E. Duffy announced that John G. Rizzo, the CEO of iTrackr Systems, was sentenced to 30 months in prison by U.S. District Judge Larry Alan Burns for illegally manipulating the stock market in connection with millions of shares of his Florida-based company. Judge Burns also sentenced Rizzo to pay restitution to the victims in the amount of $2,669,353.
As set forth in his plea agreement, in early 2006, Rizzo agreed to raise money for a Florida software company called iTrackr, which developed software to track inventory of electronics, such as the Xbox or other gaming systems, at retail stores. Beginning in late 2008, Rizzo and his co-conspirators used the services of offshore “boiler rooms” to solicit investments for the company’s “penny stock.” Unknown to investors, the boiler rooms failed to disclose that only 20 percent of each investment would go to iTrackr, with the rest being paid to the boiler rooms as commission.
As part of that scheme, Rizzo used a shell company in the British Virgin Islands (BVI) and a bank account in Belize. Rizzo sold millions of shares of iTrackr stock through his BVI company in order to avoid U.S. securities registration requirements and disguise the fact that almost all the investor funds were being diverted to the boiler rooms. In addition, Rizzo used a complex array of different entities to conceal the fact that he was the one selling the shares, rather than the shares being sold by independent third party investors. One of the business entities used by Rizzo to transfer funds in furtherance of the scheme was located in San Diego.
During 2009 alone, approximately 120 victims in the United Kingdom invested a total of approximately $2.5 million in iTrackr through Rizzo’s scheme.
Also sentenced today in a related case was Maureen Marant, who worked as Rizzo’s administrative assistant at iTrackr. Marant pleaded guilty to conspiring with Rizzo to commit wire fraud. In her plea agreement, she admitted to posing as the director of a fictitious escrow company and interacting with the victim investors by sending them stock purchase agreements, wiring instructions, and other paperwork. For her role in the scheme, Marant was sentenced to five years of probation and ordered to pay restitution in the amount of $333,755.
On October 15, 2013, in another related case, Judge Burns imposed sentence on David Bahr, a Rancho Santa Fe consultant who conspired to fraudulently manipulate and artificially inflate iTrackr’s stock. In his plea agreement, Bahr admitted that he arranged for the sale to a broker of $2.5 million in shares of iTrackr and agreed to pay that broker a secret kickback of $750,000. The purpose of the arrangement was to artificially inflate iTrackr stock as part of a “pump and dump” scheme. After pleading guilty to conspiring to commit securities fraud, Bahr was sentenced by Judge Burns to 18 months in prison and was ordered to pay a fine of $65,000.
United States Attorney Laura E. Duffy once again cautioned the public that they need to be vigilant against all forms of illegal stock manipulation, especially in the penny stock markets. Duffy praised the hard work of the agents from the Federal Bureau of Investigation and the Internal Revenue Service for their efforts and the continuing support of the Securities and Exchange Commission for their expertise and guidance.
FBI Special Agent in Charge Daphne Hearn commented, “Today’s sentencing sends a clear message to those who would defraud the public through deceit and false claims. The FBI and our law enforcement partners will aggressively pursue you and stop you from lining your pockets at the expense of others.” The public can contact the FBI at telephone number (858) 320-1800 to report investment fraud scams and other criminal activity.
Defendant in Case No. 13-CR-2823-LAB:
John G. Rizzo
Convicted of violating Title 18, United States Code, Section 1349-conspiracy to commit wire fraud.

Sentenced to 30 months in prison; three years of supervised release; restitution of $2,669,353; special assessment of $100.
Related Cases:
Case No. 13-CR-2861-LAB:

Maureen Marant
Age: 47
Lantana, Florida
Convicted of violating Title 18, United States Code, Section 1349-conspiracy to commit securities fraud.
Sentenced to five years of probation; restitution of $333,755; special assessment of $100.

Case No. 13-CR-2198-LAB:
David Bahr
Age: 54
Rancho Santa Fe, California
Convicted of violating Title 18, United States Code, Section 1349-conspiracy to commit securities fraud.
Sentenced to 18 months in prison; three years of supervised release; fine of $65,000; special assessment of $100.
Participating Agencies:
Federal Bureau of Investigation
Internal Revenue Service