Sonoma Man Pleads Guilty in $1.6 Million Fraud Scheme
|U.S. Attorney’s Office May 08, 2014|
SAN FRANCISCO—Michael Thomas Hamilton, a/k/a Thomas Smith, pleaded guilty today in federal court in San Francisco to two counts of wire fraud, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
In pleading guilty, Hamilton admitted that he engaged in a scheme to obtain money and property by means of materially false and fraudulent representations regarding Small Leaf, a book-selling business he owned and operated. Between February 2011 and continuing through October 2013, Hamilton solicited Small Leaf investors through Craigslist and other means. As part of the scheme, Hamilton falsely represented that (1) investors would earn high rates of return through the sale of books on Amazon.com and other platforms; (2) if investors did not recoup their investment by a certain date, Small Leaf would reimburse the investor with interest of 10 percent; and (3) his book-selling business generated more than one million dollars in yearly revenue. In truth, Hamilton’s book-selling business generated a minimal amount of revenue. To induce investors to turn over their money and to lull them into falsely believing their investment was profitable, he made periodic payments to investors, which he claimed were royalties earned on the sale of books through Amazon. Most of the payments made to investors, however, were from investments by new investors or additional investments by existing investors.
According to the plea agreement, by October 2013, Hamilton had solicited approximately $1,616,000 from more than 20 investors in California, Oregon, and Massachusetts.
Hamilton, 49, of Sonoma, California, was indicted by a federal grand jury on November 19, 2013. He was charged with 22 counts of mail fraud, wire fraud, and money laundering. He is currently released on a $75,000 bond.
Hamilton’s sentencing hearing is scheduled for September 4, 2014, at 1:30 p.m., before the Honorable William H. Orrick, United States District Court Judge, in San Francisco. The maximum statutory penalty for each count of wire fraud, in violation of 18 U.S.C. § 1343, is 20 years’ imprisonment and a fine of $250,000 or twice the gross gain or loss from the offense, plus restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Robert S. Leach is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Mary Mallory and Bridget Kilkenny. The prosecution is the result of an investigation by the FBI.