Christopher Bass Pleads Guilty to Mail Fraud and Attempt to Evade or Defeat Tax

ALBANY, NY—Richard S. Hartunian, U.S. Attorney for the Northern District of New York; Patrick Coultry, Resident Agent In Charge, U.S. Immigration & Customs Enforcement Office of Homeland Security Investigations; Charles R. Pine, Special Agent In Charge, Criminal Investigation, Internal Revenue Service; William Leege, Resident Agent In Charge, United States Secret Service; and John F. Pikus, Special Agent In Charge, Federal Bureau of Investigation, Albany Division, announced today that CHRISTOPHER BASS, of Menands, New York, pleaded guilty before Senior U.S. District Judge Lawrence Kahn in United States District Court to a two-count Information charging CHRISTOPHER BASS, in Count 1, with mail fraud in violation of 18 U.S.C. - 1341 and, in Count 2, with attempt to evade or defeat tax, in violation of 26 U.S.C. - 7201. Sentencing is scheduled for December 9, 2010, at 11:00 a.m., in Albany, New York.

Pursuant to a plea agreement entered today, CHRISTOPHER BASS admitted the following facts relating to the two counts in the Information:

CHRISTOPHER BASS, is a United States citizen who, prior to 2006, resided in various countries in Europe. In May 2006, CHRISTOPHER BASS relocated to Albany County, New York. CHRISTOPHER BASS has resided in New York in either Albany County or Rensselaer County from May 2006 through the present day. CHRISTOPHER BASS relocated from Europe to the United States to evade prosecution in Europe for fraudulent conduct associated with the sale of classic automobiles.

Beginning on approximately January 1, 2007, and continuing to February 1, 2010, CHRISTOPHER BASS promoted, managed, and directed a fraudulent investment program (hereinafter "Fraudulent Investment Program") involving the purchase and sale of securities to investors throughout the United States. From time to time, additional individuals who resided in the United States and also in Europe participated in the promotion and management of the Fraudulent Investment Program or aided and abetted in the promotion and management of the Fraudulent Investment Program.

CHRISTOPHER BASS used different business names to conduct the Fraudulent Investment Program. Between January 1, 2007, and approximately August 2007, CHRISTOPHER BASS conducted the Fraudulent Investment Program using the business name "Revisco Finanz AG." Between approximately August 2007, and December 2007, CHRISTOPHER BASS conducted the Fraudulent Investment Program using the business names "Revisco Finance USA" and "Revisco Finanz AG." And from approximately December 2007, through the approximately February 1, 2010, CHRISTOPHER BASS conducted the Fraudulent Investment Program using the business names "Swiss Capital Harbor/USA, LLC" and other entities that included the name "Swiss Capital Harbor" (collectively "Swiss Capital Harbor"). Revisco Finanz AG, Revisco Finance USA, and Swiss Capital Harbor are related fraudulent programs that have been promoted, directed, and managed by CHRISTOPHER BASS and others.

CHRISTOPHER BASS used three primary addresses to conduct the Fraudulent Investment Program. Between February 2007, and March 2008, the principal place of business of the Fraudulent Investment Program was 5 Hills Landing, Troy, New York. Between April 2008, and December 2008, the principal place of business of the Fraudulent Investment Program was 33 Park Hill Drive, Menands, New York. Since January 2009, the principal place of business of the Fraudulent Investment Program has been 39 North Pearl, Albany, New York. The Fraudulent Investment Program also maintained offices in New York City and Irvine, California.

Between January 1, 2007, and approximately August 1, 2009, CHRISTOPHER BASS solicited and caused others to solicit prospective investors to transfer funds to the Fraudulent Investment Program or directly to CHRISTOPHER BASS. Between January 1, 2007, and approximately August 1, 2009, CHRISTOPHER BASS solicited and accepted an aggregate total of over $5,500,000 from more than 250 investors and established accounts on behalf of each investor. CHRISTOPHER BASS obtained these investor funds from, among other sources, interstate wire transfers from financial institutions located outside New York State and through mailings delivered by the United States Postal Service.

The investors of the Fraudulent Investment Program were promised by CHRISTOPHER BASS or an agent of CHRISTOPHER BASS that all of the money they transferred to Christopher Bass and/or the Fraudulent Investment Program would be sent to one or more countries in Europe, and then invested (with other investors' money) in stocks, bonds, "funds," foreign exchange, commodities, futures, derivatives, and, after January 2008, primarily in environmental projects such as power plants. The investors of the Fraudulent Investment Program were promised by CHRISTOPHER BASS or an agent of CHRISTOPHER BASS that all of the money invested would be managed by CHRISTOPHER BASS and other experienced money/asset managers.

Contrary to CHRISTOPHER BASS's promise to investors that he would actually invest all of their deposits, less than 50 percent of the over $5,500,000 received from investors of the Fraudulent Investment Program was ever invested. Instead of being actually invested, the majority of investors' deposits was, at the direction of CHRISTOPHER BASS (1) disbursed to Christopher Bass or used to pay for personal expenses of Christopher Bass; (2) used to repay investors who demanded a return of their initial investment or a distribution of the income allegedly earned on their investments; and (3) used to pay for expenses incurred in operating the Fraudulent Investment Program.

For example, on March 31, 2008, CHRISTOPHER BASS used $169,858.96 of investors' deposits to purchase an M&T Bank Official Check that was subsequently tendered by CHRISTOPHER BASS as a down payment for the purchase of his personal residence. CHRISTOPHER BASS also caused at least $700,000 of additional investors' deposits to be disbursed to himself. CHRISTOPHER BASS caused at least $550,000 of investors' deposits to be used to finance payroll expenses of the Fraudulent Investment Program of which at least $200,000 was distributed as gross pay to CHRISTOPHER BASS and at least $50,000 was distributed as gross pay to family members of CHRISTOPHER BASS. During the 2007 calendar year, CHRISTOPHER BASS received gross income attributed to the operation of the Fraudulent Investment Program in excess of $220,000. During the 2008 Calendar Year, CHRISTOPHER BASS received gross income attributed to the operation of the Fraudulent Investment Program in excess of $700,000. During the 2009 Calendar Year, CHRISTOPHER BASS received gross income attributed to the operation of the Fraudulent Investment Program in excess of $300,000.

CHRISTOPHER BASS also used at least $1,250,000 of investors' deposits to repay other investors of the Fraudulent Investment Program who had demanded a return of their initial investment and/or income allegedly earned on their investments.

CHRISTOPHER BASS further used investors' deposits to pay the rent for office locations of the Fraudulent Investment Program in Albany, New York City, and Irvine, California, as well as the rent for a luxury apartment in New York City. CHRISTOPHER BASS used investors' deposits to pay for meals incurred in promoting the Fraudulent Investment Program. CHRISTOPHER BASS used investors' deposits to pay a law firm over $170,000 for legal services that facilitated the Fraudulent Investment Program. CHRISTOPHER BASS also used investors' deposits to pay for over $1,000,000 of additional expenses incurred in operating the Fraudulent Investment Scheme.

In furtherance of the scheme, CHRISTOPHER BASS caused periodic account statements to be issued to the investors of the Fraudulent Investment Program. The periodic account statements reported, among other information, purported monthly returns of between 2.78 percent and 4.55 percent (per month). The monthly returns and the account balances reported on all of the periodic account statements CHRISTOPHER BASS caused to be issued were false and were grossly overstated.

The periodic account statements were issued to investors on a monthly or bi-monthly basis, and were distributed as mailings through the United States Postal Service or as attachments to email messages sent via the Internet. On or about June 15, 2009, CHRISTOPHER BASS caused account statements for the May 2009 period to be created and mailed through the United States Postal Service to several hundred investors, including an investor identified by his initials as I.D. who resides in Renssalear, New York.

CHRISTOPHER BASS made numerous additional false statements to prospective and actual investors of the scheme. For example, CHRISTOPHER BASS falsely told various investors that their investment in the Fraudulent Investment Program was insured, risk free, or protected by a cash reserve account.

In summary, the Fraudulent Investment Program was a massive Ponzi scheme whereby CHRISTOPHER BASS solicited and received over $5,500,000 from investors; instead of investing investors' deposits on their behalf, CHRISTOPHER BASS (1) misappropriated and converted the investors' deposits for his personal benefit, (2) used newer investors' deposits to repay older investors who demanded a return of their initial deposits or a distribution of the income allegedly earned on their investments; and (3) used investors' deposits to pay for expenses incurred in operating the Fraudulent Investment Program.

During the 2007 Calendar Year, CHRISTOPHER BASS received an aggregate total of at least $220,000 of income from the operation of the Fraudulent Investment Program and was required by federal tax law to file a Form 1040, U.S. Individual Income Tax Return for the 2007 period. On or about October 18, 2008, CHRISTOPHER BASS filed (jointly with his wife) a Form 1040, U.S. Individual Income Tax Return for the 2007 tax period. On his 2007 tax return, CHRISTOPHER BASS reported taxable interest of $84,132 which he claimed to have received from Revisco Finance AG and net business income of $3,877 which corresponded to $30,600 of gross receipts and $26,843 of deductible expenses from a business named CWB Consulting. On his 2007 tax return, CHRISTOPHER BASS reported a total tax liability of $3,692 and, after accounting for a $5,726 payment, claimed a $3,203 refund.

With respect to the Form 1040, U.S. Individual Income Tax Return filed by CHRISTOPHER BASS and his spouse for the 2007 tax period, CHRISTOPHER BASS falsely reported the amount of income that he received from the operation of the Fraudulent Investment Program. Whereas CHRISTOPHER BASS received actual gross income of at least $220,000 from the Fraudulent Investment Program during the 2007 tax period and had taxable income of at least $145,936, CHRISTOPHER BASS falsely reported total income from the Fraudulent Investment Program of $114,732 (calculated as the sum of the $84,132 of interest income from Revisco Finanz AG and the $30,600 of gross receipts from CWB Consulting) and joint taxable income of $49,507. In other words, CHRISTOPHER BASS under-reported his income for the 2007 tax period by $105,268 and, as a result, falsely reported that his taxable income for 2007 was $49,507 and that his total tax liability for the 2007 tax period (after accounting for credits, income tax, and self-employment tax) was only $3,692. CHRISTOPHER BASS intentionally omitted the additional $105,268 of additional income on his 2007 Form 1040, U.S. Individual Income Tax Return. The omission of the additional gross receipts was a voluntary act intended by CHRISTOPHER BASS to evade the assessment of a large part of the federal income tax lawfully due from CHRISTOPHER BASS under federal tax law for the 2007 tax period. CHRISTOPHER BASS knew (at the time his 2007 tax return was filed) that he was required by federal tax law to report all of his income from whatever source derived and that, by only reporting $114,732, he was filing a false Form 1040, U.S. Individual Income Tax Return for the 2007 tax return. CHRISTOPHER BASS was also aware that the under-reporting of his income resulted in the assessment of a federal tax for the 2007 tax period that was substantially less than the federal income tax lawfully due from CHRISTOPHER BASS under federal tax law. There remains a substantial and large income tax (without regard to interest and penalties) due and owing from CHRISTOPHER BASS for the 2007 tax period of at least $34,445.

United States Attorney Richard S. Hartunian said: "This office is committed to prosecuting the perpetrators of financial frauds, including frauds which victimize individual and small investors. I want to thank our federal law enforcement partners for their hard work in uncovering this complex fraud scheme."

The case was investigated by the U.S. Immigration & Customs Enforcement Office of Homeland Security Investigations, the Internal Revenue Service - Criminal Investigation, the United States Secret Service, and the Federal Bureau of Investigation.