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Former U.S. Congressman Sentenced to Year in Prison in Tax Case Related to Scam that Sold Unregistered Securities in Internet Firms

U.S. Attorney’s Office December 11, 2012
  • Central District of California (213) 894-2434

LOS ANGELES—A former United States Congressman has been sentenced to one year and one day in federal prison in a tax fraud case related to his failure to disclose to the IRS nearly $500,000 of investor funds he received from a $10 million investment fraud scheme.

Wester Shadric Cooley, 80, a native of Los Angeles who now resides in Bend, Oregon, was sentenced yesterday afternoon by United States District Judge Dean D. Pregerson. In addition to the prison term, which Cooley was ordered to begin serving by March 11, 2013, Judge Pregerson directed Cooley to pay $3.5 million in restitution to the victim-investors and another $138,470 in back taxes to the Internal Revenue Service.

Cooley, who represented Oregon’s 2nd congressional district during a two-year term that began in January 1995, was sentenced after pleading guilty in November 2011 to subscribing to a false tax return, admitting that he received approximately $1.1 million during the scheme and that he failed to report approximately $494,000 on his 2002 tax return. The tax fraud case relates to a mail fraud and wire fraud scheme that defrauded more than 400 victim-investors out of over $10 million.

In the investment fraud scheme, former IRS Revenue Agent George Tannous and convicted felon De Elroy Beeler Jr. solicited hundreds of victims across the country to purchase unregistered stock in the Tujunga-based Bidbay.com, Inc. (a company that was later known as Auctiondiner.com, Inc.) and related companies AskGT.com and Rose Laboratories. Cooley was the vice president of Bidbay and an executive of AskGT.com and Rose Laboratories. Victim-investors were enticed to put money into the companies by several false statements, including that the companies would conduct initial public offerings, and that Bidbay.com and/or the shell companies would soon be acquired by Ebay, Inc. for $20 per share. Ebay never had any intention of acquiring Bidbay.com and had even sued Bidbay.com for trademark infringement over the use of “bay” in its name.

Tannous pleaded guilty to one count of conspiracy and one count of subscribing to a false tax return in 2008. Judge Pregerson sentenced Tannous in March 2012 to 33 months in prison.

Beeler pleaded guilty to one count of conspiracy and one count of mail fraud in late 2008. Beeler is scheduled for sentencing on February 4, 2013.

The case against Cooley is the result of an investigation by the Federal Bureau of Investigation and IRS-Criminal Investigation.

Contact:
Assistant United States Attorney Stephen A. Cazares
Major Frauds Section
(213) 894-0707

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