Vadnais Heights Man Sentenced for Selling Fake Stock
|U.S. Attorney’s Office April 12, 2010|
MINNEAPOLIS—B. Todd Jones, United States Attorney for the District of Minnesota, announced that a 59-year-old Vadnais Heights man was sentenced in federal court earlier today for bilking an investor out of more than $168,000 by selling him fictitious stock. U.S. District Court Judge James M. Rosenbaum specifically sentenced Richard Lynn Barnaby to 27 months in prison on one count of investment fraud through interstate wire. Barnaby, who was charged on October 13, 2009, and pled guilty on November 17, 2009, was also ordered to pay $222,639.26 in restitution to seven victims.
In his plea agreement, Barnaby admitted that between 2003 and May of 2005, he operated a scheme through which he sold nonexisting stock in Teledigital, Inc., an actual company that marketed pre-paid cell phone software services and equipment. To carry out the scheme, Barnaby, who served as the company’s president from July of 2002 through September of 2004, told a potential investor he was the agent for some people who wanted to sell their Teledigital stock. As a result of that representation, Barnaby actually sold the investor approximately 1,400 shares of capital stock in Teledigital between November of 2003 and October of 2005 for an aggregate price of $168,402.26. However, instead of purchasing the shares of stock as promised, Barnaby kept the $168,402.26 for his own personal use.
In furtherance of the scheme, on May 25, 2005, Barnaby used the e-mail account of an acquaintance to forward to the victim an e-mail purportedly from an official at Wells Fargo Bank, stating it could not “clear” the Teledigital capital stock until the company became “whole” with the bank. Barnaby admitted he led the victim to believe the stock existed and was in the hands of Wells Fargo Bank.
This case was the result of an investigation by the Federal Bureau of Investigation and was prosecuted by Assistant U.S. Attorney David J. MacLaughlin.