Former President and Chief Executive Officer of Software Company Pleads Guilty in Manhattan Federal Court to Perpetrating Multi-Million-Dollar Fraud Scheme

Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (FBI), announced that Scot Zarkiewicz, the co-founder, president, chief executive officer, treasurer, and principal owner of SingleClick Systems Corp. (SingleClick), a Delaware-incorporated, New Jersey-based software company, pled guilty today in Manhattan federal court to charges arising from a scheme to defraud SingleClick investors. From mid-2009 through June 2013, Zarkiewicz solicited several investors to purchase millions of dollars of privately-held SingleClick stock based on fraudulent misrepresentations about the company’s operations and financial performance. Zarkiewicz was arrested on these charges on October 9, 2013. He pled guilty today before U.S. District Judge Denise L. Cote.

Manhattan U.S. Attorney Preet Bharara said, “For four years, Scot Zarkiewicz told the investors of his software company one lie after another and swindled them out of millions of dollars. But his fraud scheme was ultimately exposed for the sham that it was, and now he will be punished for his crimes.”

Assistant Director in Charge George Venizelos said, “Scot Zarkiewicz brought a whole new meaning to cooking the books. He often exaggerated and sometimes totally made up numbers on his company’s balance sheet. Like we’ve seen time and time again, Zarkiewicz ripped off dozens of unwitting victims to fund his lavish lifestyle. Today, Mr. Zarkiewicz finds himself guilty, under his own admission, of these crimes.”

According to the information filed in this case, statements made during the defendant’s guilty plea, and other court documents:

SingleClick is a privately-held software company that was engaged in the business of providing individuals and businesses with network software products that facilitate content access and network and systems management from any Internet-connected device. From mid-2009 through June 2013, Zarkiewicz solicited investor contributions to and caused investors to maintain their investment in SingleClick based on fraudulent misrepresentations.

Specifically, during the relevant period, Zarkiewicz told SingleClick investors, in both oral and written communications, that SingleClick had several large corporate clients, millions of dollars in annual revenue, and millions of dollars in cash in bank and brokerage accounts, when, in truth and in fact, and as Zarkiewicz well knew, SingleClick conducted minimal business operations, collected significantly less than a million dollars in annual revenue and did not have more than approximately $513,000 in cash on hand. Zarkiewicz made these misrepresentations to induce potential investors to purchase SingleClick shares and to induce existing investors to purchase additional shares and/or refrain from requesting redemptions of their investments. Zarkiewicz made these misrepresentations by, among other means, distributing fabricated bank, brokerage, financial, and tax statements to investors. As a result of his fraudulent scheme, Zarkiewicz collected and maintained approximately $5.5 million from approximately 30 victims.

In May and June 2013, investors learned that SingleClick had very little cash available and confronted Zarkiewicz. Zarkiewicz admitted to investors that he lied about SingleClick’s business performance, fabricated records, and misled investors about the number of investors in and operation of SingleClick. Notwithstanding representations made in preceding years by Zarkiewicz that SingleClick had millions of dollars in revenue—including representations that SingleClick had generated $48 million in revenue in 2012—since mid-2009, SingleClick has actually been generating thousands of dollars in revenue, not millions, and SingleClick’s total aggregate bank account balances have not exceeded approximately $513,000. In August 2013, after admitting his fraudulent conduct, Zarkiewicz resigned as CEO of SingleClick.

Zarkiewicz, 41, of Toms River, New Jersey, pled guilty to a two-count information charging him with securities fraud and wire fraud. Each of the charges carries a maximum term of 20 years in prison. In addition, Zarkiewicz agreed to forfeit $5.5 million, as well as any remaining proceeds in SingleClick bank accounts, and to pay restitution as ordered by the court. Zarkiewicz is scheduled to be sentenced by Judge Cote on March 28, 2014, at 11:00 a.m.

Mr. Bharara praised the investigative work of the FBI.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group. The task force was established 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 nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney David I. Miller is in charge of the prosecution. Assistant U.S. Attorney Paul Monteleoni is in charge of the asset forfeiture related to the prosecution.

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