Johnston Man Admits Defrauding Investors in Inventions

Rocco DeSimone, 56, of Johnston, pleaded guilty today to federal mail fraud and money laundering charges, admitting that he conned an inventor and defrauded several investors with fraudulent claims about marketing inventions.

United States Attorney Peter F. Neronha, Warren T. Bamford, Special Agent in Charge of the Federal Bureau of Investigation, and Susan Dukes, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation, jointly announced the guilty plea, which DeSimone entered before U.S. District Court Judge William E. Smith in U.S. District Court, Providence. DeSimone pleaded guilty just as jury selection was scheduled to begin for his trial.

At the plea hearing, Assistant U.S. Attorney Lee H. Vilker said the government could prove that, in 2005, DeSimone convinced the inventor of a device called the Drink Stik to give him a one-third ownership interest in the product. The Drink Stik is designed to allow soldiers and first responders wearing protective gear to drink fluids without removing their gear. DeSimone falsely told the inventor that the CEO of Fidelity Investments had offered millions of dollars to purchase the Drink Stik. In fact, DeSimone had not discussed the Drink Stik with the CEO of Fidelity, nor had he ever even met him.

DeSimone then solicited investments from third parties, either to him personally or to a company he had established called Falcon, Ltd. In addition to misrepresenting that the CEO of Fidelity was interested in the Drink Stik, DeSimone also falsely represented that Raytheon Corporation and AlvaMed Corporation had offered to purchase the product. He told some investors that Raytheon was going to pay $268 million for the rights to the invention.

Through his misrepresentations, DeSimone was able to solicit approximately $1,221,250 in cash from investors. In exchange for shares in Falcon, Ltd, other investors sent him merchandise, including eight valuable antique Japanese swords.

Of more than $1.2 million that he raised for the Drink Stik, DeSimone spent about $28,000 on expenses related to the product. He spent the rest on personal expenses, including a $180,000 Ford GT automobile, art work, mortgage payments, and a large payment to the IRS for taxes owed from a previous federal prosecution involving the sale of artwork.

DeSimone also solicited investments in another invention, known as the DiscShield, which was a plastic coating designed to protect computer discs from scratches. DeSimone had spoken with an individual who had a half-ownership in the DiscShield but DeSimone did not own any interest in it or have any rights to market it. Nonetheless, he falsely represented that he was an owner and that he was negotiating with Nintendo to sell the DiscShield for between 11 and 14 million dollars.

DeSimone pleaded guilty to nine counts of mail fraud and one count of money laundering. The maximum penalty for each count of mail fraud is 20 years in prison and a fine of $250,000 or twice the amount of loss or gain. The maximum penalty for money laundering is ten years in prison and a $250,000 fine.

DeSimone is detained in federal custody pending sentencing, which is scheduled for May 21.

The Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation, conducted the investigation. Assistant U.S. Attorneys Vilker and John P. McAdams are prosecuting the case.