US Department of Justice
LOS ANGELES – The promoter of a bogus investment scheme involving distressed business assets pleaded guilty this morning to federal charges related to a Ponzi scheme in which he raised at least $12 million from victims across the United States.
Peter Jerald Frommer, 35, of Santa Barbara, pleaded guilty to wire fraud, money laundering and three counts of failing to file federal income tax returns for the tax years 2004 through 2006.
According to the indictment and his admissions in court today, Frommer operated a bogus investment scheme under the names “Cap Exchange” and “Cap X,” companies that he falsely claimed traded in surplus property of defunct companies. Frommer told numerous victims throughout the United States that he used commercial auction websites to purchase large lots of equipment for resale at higher prices.
From January 2004 until August 2006, Frommer solicited approximately $12 million from victims by promising “guaranteed” returns of up to 15 percent in as little time as six weeks. Frommer solicited investments in the bogus scheme from more than 50 investors throughout the United States, including residents of California, Oregon, Virginia, Illinois and Massachusetts. Frommer claimed that he would use victims’ money to buy the distressed assets for Cap X, and then would share profits from the subsequent sales. Instead, Frommer used the victims’ money to maintain a lavish personal lifestyle and to make Ponzi payments to victims.
Prosecutors intend to argue at sentencing that Frommer caused approximately $9 million in losses to investors. Prosecutors also intend to argue that Frommer concealed more than $5 million in income from the Internal Revenue Service by failing to file tax returns.
As a result of today’s guilty pleas, Frommer faces a statutory maximum sentence of 33 years in federal prison when he is sentenced on March 10, 2011 by United States District Judge George H. Wu.
The investigation into Frommer was conducted by the Federal Bureau of Investigation and IRS-Criminal Investigation.
Who is the operator of Ponzi Scheme in US?
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Posted by: Anil | 01/12/2011 at 02:16 AM