Federal Jury Convicts Rockwall, Texas Man in Securities Fraud Case
DALLAS—Following a four-day trial before U.S. District Judge Jane J. Boyle, a federal jury convicted 34-year-old Mark Lee Cleaton, of Rockwall, Texas, today on felony offenses stemming from an investment fraud scheme he ran, announced U.S. Attorney John Parker of the Northern District of Texas.
Specifically, the jury found Cleaton guilty on four counts of wire fraud. Each count carries a maximum statutory penalty of 20 years in federal prison and a $250,000 fine. Judge Boyle remanded Cleaton into the custody of the U.S. Marshals pending sentencing, which is set for February 4, 2016.
Cleaton was the managing member of North American Capital, LLC, formerly located at 2001 Bryan Street, Suite 2125, in Dallas. Cleaton created a limited partnership, North American Capital Investment Fund, LP (NACIF), in August 2009. The government presented evidence at trial that from approximately August 2009 to July 2010, Cleaton solicited $350,000 in investments in NACIF from several individuals, promising to invest that money in short-term, high-yield real estate projects, when in reality, he misappropriated all the money for himself, spending none of it as promised.
Throughout the scheme, Cleaton provided false investment memoranda and marketing materials to potential investors concerning the investment opportunity. Some of that material falsely represented an audited “7 year performance” history of NACIF, when as Cleaton well knew, NACIF had not even existed for seven years or had any rate of return.
Cleaton instructed each investor to wire funds into a checking account over which he had sole signatory authority. By the time he received the first investor’s funds, he had been locked out of his office in Bryan Tower for non-payment of two months’ rent. Cleaton immediately spent the investors’ money within weeks on personal expenses and unrelated business ventures, including credit card bills, trips to Hawaii, cash withdrawals, a used car business, and a high-end car audio/stereo store. He also intentionally failed to disclose to subsequent investors that he had already raised and spent prior investors’ money. Additionally, he made lulling payments to one victim investor from a later investor’s funds.
The FBI investigated the case. Assistant U.S. Attorney Nick Bunch and Deputy Criminal Chief Assistant U.S. Attorney Katherine Miller are prosecuting.