Home Baltimore Press Releases 2013 Carroll County Company Founder Pleads Guilty to $1.9 Million Securities Fraud

Carroll County Company Founder Pleads Guilty to $1.9 Million Securities Fraud
Founder and Former President of Gargoyles Inc. Misrepresented Company Sales and Customers to Investors

U.S. Attorney’s Office May 14, 2013
  • District of Maryland (410) 209-4800

BALTIMORE—John F. “Jef” Curran, III, age 42, of Westminster, Maryland, pleaded guilty today to securities fraud in connection with the sale of $1.9 million worth of stock in his company, Gargoyles Inc.

The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; and Postal Inspector in Charge Gary R. Barksdale of the U.S. Postal Inspection Service-Washington Division..

According to the statement of facts that is part of his plea agreement, Curran was the founder, president, and single largest shareholder of Gargoyles Inc., located in Westminster, Maryland. Gargoyles was a self-described “advanced materials application company,” purportedly doing business with customers in a variety of settings including the military and law enforcement.

From January 2009 to September 2010, Curran sold approximately $1.9 million worth of Gargoyles stock to investors. Curran admitted that he falsely represented to investors and potential investors that Gargoyles had customers, sales contracts, and purchase orders for its products when, in fact, it did not. Curran also misrepresented his education to investors.

As part of his plea, Curran is obligated to pay restitution up to the amount of $1,963,065, to refund to any investor who so wishes the money they invested in Gargoyles Inc. Investors will be notified of the option of receiving a refund and will have 30 days from the receipt of the notice to make the refund request.

As part of his plea agreement and to resolve In the Matter of John Francis Curran, III and Gargoyles Inc., Case No. 2010-0184, Curran and Gargoyles Inc. agree to the entry of a consent order with the Maryland Securities Division of the Office of the Maryland Attorney General prohibiting Curran from violating the Maryland Securities Act and permanently barring Curran from selling or offering for sale securities in Maryland.

Curran faces a maximum sentence of 20 years in prison. U.S. District Judge Richard D. Bennett has scheduled sentencing for August 4, 2013, at 3:00 p.m.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

United States Attorney Rod J. Rosenstein thanked the FBI and U.S. Postal Inspection Service for their work in the investigation and thanked the Securities Division of the Office of the Maryland Attorney General for its assistance in the case. Mr. Rosenstein praised Assistant U.S. Attorney Leo Wise, who is prosecuting the case.

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