In Los Angeles, California, the promoter of a bogus investment scheme involving distressed business assets pleaded guilty to federal charges related to a Ponzi scheme in which he raised at least $12 million from victims across the United States. Peter Jerald Frommer, of Santa Barbara, pled guilty to wire fraud, money laundering, and three counts of failing to file federal income tax returns for the tax years 2004 through 2006.
According to the indictment and his admissions in court, Frommer operated a bogus investment scheme under the names “Cap Exchange” and “Cap X,” companies that he falsely claimed traded in surplus property of defunct companies. Frommer told numerous victims throughout the United States that he used commercial auction websites to purchase large lots of equipment for resale at higher prices.
From January 2004 until August 2006, Frommer solicited approximately $12 million from victims by promising “guaranteed” returns of up to 15 percent in as little time as six weeks. Frommer solicited investments in the bogus scheme from more than 50 investors throughout the United States, including residents of California, Oregon, Virginia, Illinois, and Massachusetts. Frommer claimed that he would use victims’ money to buy the distressed assets for Cap X, and then would share profits from the subsequent sales. Instead, Frommer used the victims’ money to maintain a lavish personal lifestyle and to make Ponzi payments to victims.
Prosecutors intend to argue at sentencing that Frommer caused approximately $9 million in losses to investors. Prosecutors also intend to argue that Frommer concealed more than $5 million in income from the Internal Revenue Service by failing to file tax returns. As a result of his guilty pleas, Frommer faces a statutory maximum sentence of 33 years in federal prison when he is sentenced on March 10, 2011 by a United States District Judge. The investigation into Frommer was conducted by the Federal Bureau of Investigation and IRS-Criminal Investigation.
If you have been charged with a federal crime such as wire fraud, money laundering, or failing to file a federal income tax return, you need a skilled federal criminal defense attorney to protect your legal rights. Attorneys Steven Cron and Philip Israels have been representing clients on federal criminal charges for decades. The Federal Bureau of Investigation and United States Federal authorities take a hard look at these type of federal crimes and have placed severe penalties if you are convicted. If you have been charged or under investigation for any type of federal crime, it is vital you contact a Los Angeles and United States federal criminal defense lawyer to discuss your case. Contact us for a free, strictly confidential, consultation 24/7.