Pair Sentenced to Federal Prison Terms for Swindling $30 Million from More Than 100 Investors in Purported Telecom Business
CHICAGO—Two defendants were sentenced today to federal prison terms for an investment fraud scheme in which they swindled more than $30 million from more than 100 investors in a purported voice-over-Internet telecommunications business. One defendant, GAIL HOWARD, was sentenced to seven years in prison, while her co-defendant, JAMES JEDYNAK, was sentenced to 6½ years in prison. Together, Howard and Jedynak misappropriated more than $6 million of investors’ funds for their own benefit.
Howard, 64, of Springdale, Ark., and formerly of California, pleaded guilty to wire fraud, while Jedynak, 49, of Hemlock, Mich., and formerly of north suburban Northfield, was convicted of wire fraud at a trial in June 2013.
Both defendants were ordered to pay $30.27 million in restitution by U.S. District Judge Robert M. Dow, Jr., who imposed the sentences today in Federal Court in Chicago. Jedynak and Howard were each ordered to start serving their sentences on April 28.
According to court records, Howard was president and chief executive officer, and Jedynak was in charge of recruiting investors, at Unified Worldwide Transport, LLC (UWT), a Santa Monica, Calif., company that purported to be in the business of routing voice-over-Internet protocol (VOIP) telecommunications traffic. UWT sold equity shares to investors through private placement offerings, and Jedynak was responsible for recruiting individuals and entities, including some from the Chicago area, to invest in the business.
Between 2003 and 2007, Howard and Jedynak raised more than $30 million through the fraudulent offer and sale of investment interests and loans to UWT. They falsely represented that investments and loans would be used to acquire telecommunications routes, build network infrastructure, provide working capital, repay debt, and purchase licenses and equipment. Instead, they misappropriated approximately $6.2 million to purchase luxury goods and services, such as a swimming pool, a boat, jewelry, and plastic surgery, to pay for home improvements, to make payments to friends and relatives, to make personal investments, to purchase real estate, and to fund outside business interests.
To facilitate the fraud scheme, the defendants falsely represented that UWT had a contract with Illinois-based Caterpillar Corp., which they claimed owed UWT a lot of money, when in fact there was no contract and no money owed.
Jedynak falsely represented to investors that he would receive no compensation from UWT until investors received all of their principal back. Howard told investors that she had a law degree and a master’s degree in business administration and had worked as a state prosecutor in Arkansas, none of which was true.
The sentences were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Illinois Department of Securities assisted the investigation conducted by the FBI.
The government was represented by Assistant U.S. Attorneys Rachel Cannon, Ryan Hedges, and Derrick Owens.