Nine Charged in a $20 Million Fraudulent Investment Scheme Involving a Virtual Reality Video Game Company
|U.S. Attorney’s Office September 29, 2009|
Jeffrey H. Sloman, Acting United States Attorney for the Southern District of Florida, and Michael J. Folmar, Acting Special Agent in Charge, Federal Bureau of Investigation (“FBI”), Miami Field Office, unsealed a twenty-two count Indictment today charging Jimmy L. Barker, Jr., 40, of Wellington, FL, Robert Ladrach, 46, of Lake Worth, FL, Theodore Ginocchio, 51, of Port Saint Lucie, FL, Marc Rifkin, 52, Boynton Beach, FL, Ronald Bowsky, 64, of Fort Lauderdale, FL, Jack Maddock, 51, Boynton Beach, FL, Robert Pozsony, 61, of Loxahatchee, FL, and Rodger Brownson, 60, of Mission Viejo, CA, with conspiracy to commit mail and wire fraud, substantive mail and wire fraud, and perjury in connection with a scheme to defraud more than 600 investors throughout the United States. As well, on September 9, 2009, Michael Weidgans was charged by Information with conspiracy to commit securities fraud in connection with his role in this scheme. Defendants Jimmy L. Barker, Jr., Theodore Ginocchio, Ronald Bowsky, Jack Maddock, and Robert Pozsony made their initial appearances in Court before U.S. Magistrate Judge John O'Sullivan today. Rodger Brownson, who resides in California, remains a fugitive. Defendants Robert Ladrach and Marc Rifkin will appear in federal court in Florida at a later date.
According to the Indictment, from around 1999 through mid-2008, 3001 AD, LLC and its affiliates operated as a virtual reality video gaming company that developed, marketed, and sold high-tech video game products. Initially, 3001 AD, LLC and its affiliates operated “Beta Zones,” which were virtual reality video game centers installed in popular theme parks. In 2004, 3001 AD, LLC and its affiliates began touting the Trimersion First Person Shooter Video Game Accessory as an in-home accessory that allowed players to immerse themselves in video games played on commercially available video game consoles.
The Indictment further alleges that the defendants raised between $15 and $20 million from investors by selling equity interests in 3001 AD, LLC, Trimersion, LLC, and numerous affiliated entities with similar names. Investors were attracted through the defendants’ use of materially false and misleading representations and omissions, which gave the investing public an unrealistic expectation of potential profits to be generated by the sale of virtual reality video gaming equipment. In fact, many investors were promised $29,000 profit annually on each $5,000 invested. Additionally, the defendants told investors that significant profits would be generated by an imminent merger or public offering of stock. To bolster these claims, investors were falsely led to believe that prominent entrepreneurs and well-known companies were considering significant investments in 3001 AD, LLC and its affiliates. In truth, however, the Beta Zones that were operated never generated sufficient profits to distribute returns to investors, only approximately 2,000 Trimersion headsets were ever delivered to 3001 AD, LLC and its affiliates, and very few Trimersion headsets were ever sold.
Furthermore, the Indictment alleges that instead of using the investor money to develop and produce virtual reality gaming equipment, the defendants misappropriated investor funds to pay large undisclosed sales commissions and to pay for unauthorized personal expenses. Lastly, the Indictment alleges that defendant Ronald Bowsky committed perjury by testifying falsely during an investigative proceeding conducted by the Miami Regional Office of the Securities and Exchange Commission.
Acting U.S. Attorney Jeffrey Sloman stated, “In this case, the defendants offered investors an opportunity to participate in what appeared to be a high-growth profitable industry, with little risk on their investment. In fact, however, the defendants were focused only on making money for themselves. Today, we reaffirm our commitment to punish those who weaken American capital markets by engaging in fraudulent practices. As well, the perjury charge serves as a reminder of the importance of oaths administered in investigative proceedings.”
Michael J. Folmar, Acting Special Agent in Charge of the FBI’s Miami Office, stated, "With more than 600 victims, this fraudulent scheme lured many with its boastful claims of large profits, little risk, and empty promises of bigger and better plans for the future. This is a reminder to all of us that if something looks too good to be true, it probably is. It also sends a message to those that prey on innocent victims that you can't steal from them and get away with it."
Mr. Sloman commended the investigative efforts of the FBI and the Miami Regional Office of the Securities and Exchange Commission. In a separate action, the Miami Regional Office of the SEC has filed a parallel civil complaint seeking injunctive and other equitable relief. The criminal case is being handled by Assistant United States Attorney Ryan Dwight O’Quinn.
An indictment is only an accusation and is not evidence of guilt. A defendant is presumed innocent until proven guilty. A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.