Rancho Santa Fe Man Pleads Guilty in $25 Million Investment Fraud Scheme
|U.S. Attorney’s Office November 16, 2009|
SAN DIEGO, CA—United States Attorney Karen P. Hewitt announced that today Richard M. Hersch pled guilty to Mail Fraud and Conspiracy to Structure Financial Transactions in U.S. District Court in San Diego before the Honorable John A. Houston. Hersch faces a maximum term of 20 years in prison for Mail Fraud and five years in prison for Conspiracy to Structure Financial Transactions. The plea agreement provides for Hersch to pay at least $9.2 million in restitution for investors defrauded by Hersch.
As part of his guilty plea, Hersch admitted that he operated an investment scheme in which he recruited investors by promising returns of two-to-six percent per week on investments into his company, All States ATM, Inc. Hersch told investors that All States ATM had contracts with major horse racing tracks in California and around the country to operate Automated Teller Machines (ATMs) on the “backside” of the racetrack, an area used by employees of the racetrack, horse owners, horse trainers and others, and not accessible to the general public. Hersch also claimed that the contracts his company had with the racetracks allowed him to operate a check-cashing or loan service on the back side of the track for the exclusive use of those with access to the backside of the tracks. Hersch claimed that he had 160 employees and hundreds of ATM and that his company was in its eighth year of business. The horse racing tracks identified by Hersch report having no contracts with him or All States ATM to provide financial services of any sort. Based on these false representations, Hersch and others recruited more than 150 investors to invest approximately $25 million in All States ATM.
In addition, Hersch admitted during his guilty plea that he conspired with others to structure 15 transactions, totaling $141,500, for the purpose of evading the currency reporting requirements. Hersch and others withdrew cash from a Wells Fargo Bank Account in amounts between $9,000 and $9,500 because they knew that withdrawals of cash over $10,000 triggered the currency reporting requirements.
Hersch is scheduled to be sentenced on February 8, 2010, before Judge Houston.
|DEFENDANT||CASE NUMBER: 09CR1672-JAH|
|Richard M. Hersch||Rancho Santa Fe, California||Age: 72|
SUMMARY OF CHARGES
Count 1: Mail Fraud – Title 18, United States Code, Section 1341
Count 15: Conspiracy to Structure Financial Transaction – Title 18, United States Code, Section 371; Title 31, United States Code, Section 5324.
Federal Bureau of Investigation
Internal Revenue Service – Criminal Investigation