U.S. Attorney's Office
Northern District of California
(415) 436-7200
July 10, 2015

Partners in Scotts Valley Investment Company Sentenced to Prison for Fraud Scheme

SAN JOSE—Keith Rode was sentenced yesterday to 70 months in prison and ordered to pay $32,880,811.82 in restitution for his role in an investment fraud, announced United States Attorney Melinda Haag and Federal Bureau of Investigation Special Agent in Charge David J. Johnson. The sentence brings a close the last of the three cases against the partners of Geringer, Luck, and Rode LLC, a Scotts Valley investment company.

Rode, 47, of Los Angeles, along with his co-defendants, John Geringer, 50, of Santa Cruz and Christopher Luck, 58, of Scotts Valley, pleaded guilty in 2014. Each defendant has acknowledged playing a role in an investment fraud scheme: Rode pleaded guilty to one count of mail fraud while Geringer and Luck each pleaded guilty to one count of conspiracy to commit mail and wire fraud, one count of mail fraud, and one count of securities fraud. According to the plea agreements, Geringer, Luck, and Rode, each admitted they made false and misleading statements to induce people to make investments in a fund managed by the partnership. Specifically, at the end of April 2009, Geringer confessed to Rode and Luck that he had been falsifying the investment fund’s trading records for several years. Instead of terminating the fund or reporting Geringer to the authorities, Rode and Luck admitted they continued to recruit investors by making false and misleading statements to members of the public, including that the fund had a positive historical performance and that the fund made diversified equity trades.

In each of their guilty pleas, Geringer, Luck, and Rode acknowledged that these false and misleading statements were necessary to cause new investors to contribute to the fund and to induce existing investors to maintain their investments or furnish more money. The defendants also admitted that new investor money was critical to keeping the fund afloat and that if they were truthful with potential investors, new investors most certainly would have chosen not to invest. The defendants also admitted that this new investor money was used to pay the partners’ salary and bonus payments. In total, between 2003 and 2012, Geringer defrauded investors out of over $50 million. Between May 2009 and 2012, after Geringer confessed the fraud to Luck and Rode, investors were defrauded out of over $30 million.

Geringer, Luck and Rode were indicted by a federal grand jury on December 20, 2012. Each defendant was charged with conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. § 1349; mail fraud, in violation of 18 U.S.C. § 1341; wire fraud, in violation of 18 U.S.C. § 1343; securities fraud, in violation of 15 U.S.C. §§ 78j(b) and 78ff and 17 C.F.R. §§ 240.10b-5 and 240.10b5-2; and money laundering, in violation of 18 U.S.C. § 1957. All the charges were related to the defendants’ conduct at Geringer, Luck, and Rode, LLC.

On January 15, 2015, Luck was sentenced to 130 months’ imprisonment. The sentence was handed down by the Honorable Edward J. Davila, U.S. District Judge, following Luck’s guilty plea to one count of conspiracy to commit mail and wire fraud, one count of mail fraud, and one count of wire fraud. Judge Davila also sentenced Luck to a three year period of supervised release, ordered the defendant to pay restitution in the amount of $32,880,811.82, and ordered him to forfeit $32,880,811.82 to the United States government. Luck began serving his prison term on April 9, 2015.

Geringer was sentenced to 145 months’ imprisonment on June 25, 2015. This sentence also was handed down by Judge Davila following Geringer’s plea of guilty to one count of conspiracy to commit mail and wire fraud, one count of mail fraud, and one count of wire fraud. Judge Davila also sentenced Geringer to a three year period of supervised release, ordered the defendant to pay restitution in the amount of $50,327,484.04, and ordered him to forfeit $50,327,484.04 to the United States government. Geringer will begin serving his prison term on August 20, 2015.

Yesterday, Judge Davila sentenced Rode to 70 months’ imprisonment following Rode’s guilty plea to one count of mail fraud. Judge Davila also sentenced Rode to a three year period of supervised release, ordered the defendant to pay restitution in the amount of $32,880,811.82, and to forfeit $32,880,811.82 to the United States government. Rode will begin serving his prison term on September 3, 2015.

Assistant U.S. Attorney Jeff Schenk is prosecuting the case with the assistance of Nina Williams and Laurie Worthen. The prosecution is the result of an investigation by the Federal Bureau of Investigation.

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