Founder of Investment Company Sentenced in $21 Million Fraud Scheme
|U.S. Attorney’s Office December 05, 2013|
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Michael B. Steinbach, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announce that James C. Howard, III, 54, of Parkland, Florida, the founder of Commodities Online LLC (COL), was sentenced on December 3, 2013, for his participation in a $21 million investment fraud scheme.
U.S. District Judge Joan Lenard sentenced Howard to 189 months in prison, followed by three years of supervised release. The court also ordered a forfeiture judgment of $21,631,466. The court will also order restitution to be paid to the victims. The restitution hearing is set for February 24, 2014.
Howard pled guilty on September 16, 2013, to one count of conspiracy to commit mail and wire fraud, in violation of Title 18, United States Code, Section 1349. According to court documents, Howard conspired with co-defendants Patricia S. Saa, Louis N. Gallo, III, and Michael R. Casey to defraud individuals who invested in COL. From approximately January 2010 through April 2011, Howard and his co-conspirators used material false and fraudulent representations and material omissions to obtain more than $21 million from over 700 investors.
According to court documents, Howard and his co-conspirators used COL to sell COL ownership units, subscriptions to the COL website, and investments in purported transactions to buy and sell commodities. After receiving the funds for the COL ownership units, Howard and Saa diverted a large part of those funds for other purposes. In addition to selling COL ownership units, Howard and his co-conspirators caused certain purported “pre-sold” commodities contracts to be offered for investment via the COL website, stating a pre-determined percentage return on investment and the number of days by when investors would be paid. Howard and his co-conspirators also represented to investors that COL had a track record of profits. However, COL did not have profits. Any payments made to investors were made using funds received from newer investors.
Also according to court documents, Howard and his co-conspirators made material misrepresentations and omissions about the leaders of COL. After mid-2010, Howard and his co-conspirators represented that Howard was no longer president of COL and that co-defendant Casey, an attorney, was the president of COL. Howard and his co-conspirators represented that Howard was no longer managing COL, when in fact, Howard remained in charge. Also, Howard and his co-conspirators did not disclose to investors that both Howard and co-defendant Gallo had previously been convicted of federal felonies and that Gallo was still serving a term of supervised release.
The trial of Howard’s co-defendants, Casey, Gallo, and Rita Balbirer, who were charged in the same indictment, is scheduled for March 10, 2014. Balbirer was charged with money laundering.
In addition to codefendants charged in the same indictment with Howard, other participants in the investment fraud conspiracy related to COL have been charged in separate Informations: Timothy B. Josselson, the chief operating officer; Kathryn A. Josselson, the comptroller; and Robert S. Lananna, the director of Sales. Timothy Josselson pled guilty November 22, 2013. His sentencing is scheduled for January 30, 2014. Kathryn Josselson pled guilty November 14, 2013. Her sentencing is scheduled for January 23, 2014. Robert Lananna pled guilty November 14, 2013. His sentencing is scheduled for January 31, 2014.
Mr. Ferrer commended the investigative efforts of the FBI and the cooperative efforts of the Miami Regional Office of the U.S. Securities and Exchange Commission. This case is being prosecuted by Assistant U.S. Attorney Ana Maria Martinez.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls.