Brockport man pleads guilty to his role in multi-million dollar investment scam

BUFFALO, N.Y.-U.S. Attorney Trini E. Ross announced today that Halford W. Johnson, 60, of Brockport, NY, pleaded guilty to conspiracy to commit securities fraud before U.S. District Judge Lawrence J. Vilardo. The charge carries a maximum penalty of five years in prison.

Assistant U.S. Attorney Paul E. Bonanno, who is handling the case, stated that between September 2013, and April 2018, Johnson conspired with co-defendant Darin R. Pastor to defraud multiple investors through a publicly traded company named Creative App Solutions, Inc., whose stock was registered with the United States Securities and Exchange Commission. On September 6, 2013, Pastor paid approximately $1,774.10 to purchase approximately 3,548,200 shares of Creative App Solutions’ stock. Pastor became the CEO and changed the company’s name to Capstone Financial Group, Inc. Johnson was appointed Chief Financial Officer of Capstone.

From September 2013, through March 2017, approximately 95 investors purchased Capstone stock for $19,807,303. Johnson and Pastor fraudulently represented to investors and potential investors that Pastor had substantial personal wealth. For instance, they created a Wikipedia page for Pastor claiming that he had a net worth of hundreds of millions of dollars. They also mislead investors and potential investors to believe that their money would be used by Capstone to fund business deals that would generate substantial profits and increase the value of Capstone stock. These business deals included the building of a gas-to-liquid fuel production facility, the selling of gold to Hong Kong and Australian based companies, the selling of livestock, and multi-million-dollar investments by other companies in Capstone, all of which projected revenues of hundreds of millions of dollars.

Defendant Pastor used millions of dollars of investors’ money to pay his personal expenses and fund a lavish lifestyle for himself and his wife, including:

• repaying his personal debt to a securities firm;
• purchasing a house in Clarence, NY, for $1.5 million;
• purchasing a house in Florida for a relative;
• purchasing jewelry worth $294,640; and
• paying for his destination wedding in the Caribbean.

In December 2016, Capstone filed a Form 15 with the SEC terminating Capstone’s duty to file periodic and current reports with the SEC. Johnson and Pastor told investors that this meant Capstone was “going dark.” In April 2017, Capstone offered to buy back shares of Capstone stock from its investors and pay them at least four times the amount they initially paid for the stock. Johnson and Pastor knew that Capstone did not have sufficient money to pay the investors who had accepted the stock buyback offer. In order to further lull investors into believing that Capstone would fulfill its buyback agreements, Capstone made partial payments to investors totaling $6,728,500. The total loss to investors is $19,807,303.

Defendant Pastor was also charged but died in March 2023.

The plea is the result of an investigation by the Internal Revenue Service, Criminal Investigation Division, under the direction of Special Agent-in-Charge Thomas Fattorusso, and the Federal bureau of Investigation, under the direction of Special Agent-in-Charge Matthew Miraglia.

Sentencing is scheduled for April 2, 2024, before Judge Vilardo.

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