Former Riverside, California Man Sentenced to 23 Years in Federal Prison for Running Investment Scheme That Involved More Than 200 Victims and More Than $14 Million
Defendant Squandered Investor Funds on Luxury Cars, Jewelry, Travel, and Entertainment
|U.S. Attorney’s Office October 10, 2012|
DALLAS—Bradley C. Stark, 37, formerly of Riverside, California, was sentenced late yesterday by U.S. District Judge Barbara M.G. Lynn to 23 years in federal prison and ordered to pay approximately $13 million in restitution, following his conviction at trial in January 2012 on all counts of an indictment charging seven counts of wire fraud and one count of securities fraud related to his fraudulent securities offerings. Today’s announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
Stark incorporated Sardaukar Holdings as an international business corporation in the British Virgin Islands to engage in the business of investing and managing clients’ financial assets. From October 2004 thorough early July 2005, Stark operated Sardaukar from his residence in Riverside.
Stark used materially false and fraudulent representations to solicit individuals to invest in Sardaukar. For example, he represented to investors, and encouraged and allowed others to represent to investors, that: 1) he had previous institutional trading experience; 2) that he was a registered securities broker or dealer; 3) he had hundreds of millions of dollars in investments from private and institutional clients; 4) he would invest their funds in sophisticated financial transactions, including tri-party repurchase agreements, commodities futures and currency trading; 5) historically, investments in Sardaukar had yielded high rates of return, often more than 20 to 30 percent per month; and 6) for $50,000 investors could purchase an insurance contract through him that would insure invested principal against any loss.
Stark also knowingly and intentionally failed to advise investors that he had been convicted in April 2003 of a federal felony offense, uttering a false and counterfeit security, and in May 2003 in the state of Colorado, of fraud by check.
The government presented evidence at trial that Stark squandered the majority of investor funds on luxury cars, travel/entertainment, and jewelry. He also transferred more than $1 million to his wife.
Based on Stark’s representations, individuals entered into agreements to provide funds to him for investment. One individual raised funds from investors in the Northern District of Texas and elsewhere, which was sent to Stark for investment. The largest investor in Sardaukar Holdings was a company in the Dallas area, Megafund Corporation, which was run by Stanley Leitner. Leitner, who testified for the government at trial, was previously convicted in the Northern District of Texas of wire fraud, securities fraud, and money laundering in connection with his operation of Megafund. Leitner is currently serving a 210-month federal prison sentence.
Securities fraud is a major focus of President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
The investigation was led by the Internal Revenue Service Criminal Investigation and the FBI with assistance from the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Santa Barbara, California, Sheriff’s Office.
Assistant U.S. Attorneys Paul Yanowitch and Christopher Stokes prosecuted.