JAMES B. COMEY, the United States Attorney for the Southern District
of New York, announced today that six defendants have been sentenced in
Manhattan federal court for participating in a bogus investment scheme,
marketed over the Internet, that defrauded approximately 172 investors
from around the world of more than $16 million. The architects of the
scheme, ANTHONY GUASTELLA and ROBERT MARTINS, both of Las Vegas, Nevada,
were sentenced this week to 16 years and 8 months and 11 years and 3 months
in jail, respectively.
On June 13, 2001, GUASTELLA, 50, and MARTINS, 56, were convicted after
a jury trial of conspiracy, wire fraud, money laundering, and interstate
transportation of stolen property. During a recess after the jurys
guilty verdict was announced, GUASTELLA, who had been on bail during trial,
fled the courthouse, and was apprehended later that night outside the
Marriot Marquis Hotel in Times Square by members of the United States
Marshal Services Fugitive Squad.
According to the evidence at trial, GUASTELLA and MARTINS operated a fraudulent
investment program that offered investors the opportunity to lease
$1 million from a European bank upon payment of a fee of $35,000. Investors
were told that the $1 million in leased funds would then be
placed in a high-yield investment program that would generate
returns of $5 million or more within a ten-month period. The program was
marketed through, among other means, an Internet web site operated by
MARTINS through his company, Assets International Ltd.
According to the evidence, investors received proof of funds
letters on the letterhead of First Mutual Sparkassa, which
the defendants claimed was a savings bank in Stockholm, Sweden, as well
as on the letterhead of Euro Banque of London, England. These
letters purported to confirm that the $1 million, or other amount of funds
leased by the investor, was being held in a custodial trust
account in the investors name.
In fact, as the evidence at trial showed, the investment program was entirely
fictitious. Neither First Mutual Sparkassa nor Euro
Banque was a real bank, and they were not holding millions of dollars
on behalf of investors. The proof of funds letters were simply
printed off GUASTELLAs home computer in Las Vegas, and signed by
him in the names of fictitious bank officers. Moreover, the high
yield investment programs promoted by the scheme - a variation
of so-called Prime Bank frauds which have been the subject
of alerts from the Federal Reserve and other regulatory agencies since
the early 1990's - do not exist.
From October 1997 to July 1998, GUASTELLA and MARTINS collected over $16
million in lease fees from investors located across the United
States and in other parts of the world, including Europe, Canada, Cental
America and the Far East. The evidence at trial showed that GUASTELLA
and MARTINS divided the money, and used it to buy lavish homes and vehicles,
among other things.
GUASTELLA used the investors funds to purchase a $650,000 home in
Las Vegas, a $55,000 Rolls Royce, and a $49,000 Bentley, and to make nearly
$200,000 in cash withdrawals from ATM machines. MARTINS used his portion
of the money to purchase a $600,000 home in Las Vegas, a $430,000 warehouse
and a $125,000 Mercedes, and made approximately $41,000 in ATM withdrawals.
MARTINS also transferred $2 million of the investors funds to bank
accounts in the Bahamas and Luxembourg.
On Tuesday, January 29, 2002, United States District Judge SHIRA A. SCHEINDLIN
sentenced GUASTELLA to 200 months in prison. On January 28, Judge SCHEINDLIN
sentenced MARTINS to 135 months in prison. Judge SCHEINDLIN found that
GUASTELLA and MARTINS planned, organized, and implemented the scheme,
supervising the activities of their co-conspirators. Judge SCHEINDLIN
noted that the scheme had caused many victims to lose their entire
life savings, and expressed the hope that both GUASTELLA and MARTINS,
during their lengthy periods of incarceration, would reflect upon the
pain their crimes had inflicted upon their victims.
In imposing the higher sentence upon GUASTELLA, Judge SCHEINDLIN also
found that he had committed perjury during his testimony at trial, and
also noted GUASTELLAs alleged continued fraudulent conduct, as evidenced
by a recent arrest warrant issued by the Nevada police. The Nevada case
charges GUASTELLA with fraudulently misappropriating the identity of a
Nevada minister who - before learning that he, too, had been victimized
by GUASTELLA - had testified at the New York trial as a character
witness on GUASTELLAs behalf.
In addition, Judge SCHEINDLIN ordered both GUASTELLA and MARTINS to pay
restitution in the amount of $16,762,000, and ordered them to forfeit
a number of assets seized by the Government, including several brokerage
and bank accounts at Smith Barney in New York, Norwest Bank in Nevada,
and Jyske Bank in Copenhagen, Denmark, and the cars and homes GUASTELLA
and MARTINS purchased with their victims money.
The Government, which estimates that the seized assets are worth in excess
of $10 million, intends to use them to make restitution to the defrauded
victims. In October 2001, Judge SCHEINDLIN appointed Anthony Valenti,
of Holland & Knight Consulting LLC in New York, as a Special Master
for purposes of identifying the victims and their losses and recommending
a plan for distributing restitution funds to the victims.
Four other co-defendants entered guilty pleas in the case and were previously
sentenced by Judge SCHEINDLIN:
MARIANNE CURTIS, 60, of Costa Mesa, California, pled guilty on May 8,
2001 to conspiracy to commit wire fraud. Through her company TMZ Trading,
Inc., CURTIS purported to manage the high yield investment program
that would generate astronomical returns for investors. On October 17,
2001, CURTIS was sentenced to 2 years and 9 months in prison.
LOUIS FRECHETTE, 47, of Hollywood, Florida, pled guilty on May 10, 2001
to conspiracy to commit wire fraud. FRECHETTE acted as a liaison between
CURTIS and GUASTELLA and MARTINS and, together with CURTIS, repeatedly
gave investors false assurances that the high-yield investment program
was about to pay off. On August 29, 2001, FRECHETTE was sentenced to a
year and six months in prison.
ROY THORNTON, 69, of Duluth, Georgia, pled guilty on April 17, 2001 to
conspiracy to commit wire fraud, as well as one substantive count of wire
fraud. THORNTON recruited numerous investors to the scheme, and, along
with CURTIS and FRECHETTE, received kickbacks from GUASTELLA and MARTINS
which were not disclosed to investors. On August 30, 2001, THORNTON was
sentenced to 2 years and 3 months in prison.
MICHAEL McCLAIN, 50, of Las Vegas, Nevada pled guilty on May 16, 2001,
two days after the trial began, to conspiracy to use a fictitious name.
The evidence at trial showed that GUASTELLA and McCLAIN were friends and
that, during the course of the scheme, McCLAIN allowed GUASTELLA to use
McCLAINs name in dealing with investors, and received payments from
GUASTELLA in return. On September 5, 2001, McCLAIN was sentenced to two
years probation.
Judge SCHEINDLIN also ordered GUASTELLA and MARTINS each to serve a five-year
term of supervised release, and CURTIS, FRECHETTE and THORNTON each to
serve a two-year term of supervised release, following their release from
prison. As a special condition of their supervised release terms, Judge
SCHEINDLIN prohibited the defendants from selling securities or other
investment products and from acting as a broker, agent, or fiduciary in
connection with securities or other investment products.
Mr. COMEY praised the investigative efforts of the United States Customs
Service and the Internal Revenue Service for their outstanding work on
the investigation, which began in 1998.
Assistant United States Attorneys MICHAEL S. SCHACHTER and GARY STEIN
are in charge of the prosecution.
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