L.A. Investment-Peddling Ring Is Broken
Federal investigators said Wednesday that they have dismantled a major Los Angeles-based white-collar criminal enterprise, obtaining guilty pleas from three men overseeing a vast labyrinth of unregulated boiler rooms whose telemarketers duped more than 3,000 investors out of about $50 million.
Investigators say the phone room network stretched from the San Fernando Valley to San Diego and marketed at least a dozen investments, including a 900-number dating service and an online shopping mall.
Assistant U.S. Atty. Steven Peak said the three executives who pleaded guilty--Ira Itskowitz, 47, of Agoura Hills; Michael E. Lopuszynski, 34, of Apple Valley; and Daniel W. Rearick, 32, of Levittown, Pa.--have agreed to cooperate in the ongoing federal probe. The three pleaded guilty to more than 24 counts each, including conspiracy, securities fraud, money laundering and tax evasion.
Each is expected to face a prison term of six to 10 years. Investigators said Itskowitz agreed to forfeit more than $100,000 held in an account in the Turks and Caicos Islands.
The amount recovered for investors--as a result of earlier civil suits--is expected to total only about $3 million.
Other targets of the investigation are likely to include two California attorneys who allegedly helped launder proceeds from the investment schemes with client trust accounts.
Six other defendants named in court documents are expected to plead guilty in U.S. District Court in San Diego next week, Peak said: Robert H. Reisner, Michael Engelhardt, Joseph J. Widmer, James C.Q. Slaton, Mark V. Nachamkin and Paul E. Perelman. One other, C. Scott Courtney, is to plead guilty in federal court in Los Angeles, Peak said. All have been freed on bonds.
Investigators consider Itskowitz and other targets of the probe to be among “the big fish” of Southern California telemarketing crime, which they say includes perhaps a dozen other major groups.
Instead of funding the Internet firms and other ventures they pitched, investigators said, the defendants used investors’ money to feed their own lavish lifestyles. One defendant rented a 10,000-square-foot house; another leased expensive German cars and took a $14,000 cruise; and a third purchased an auto dealership, authorities said. Credit card records show they spent up to $15,000 a week on limousine rentals, authorities said.
“This was a significant group, but is this going to wipe out the problem? Absolutely not,” said Bill Gore, special agent in charge of the FBI’s San Diego field office.
As described in court documents, the organization was a complex web stretching from Woodland Hills to San Diego to Orlando, Fla. From July 1994 to June 1997, pitchmen would call potential investors and invite them to put a minimum of $5,000 into a “general partnership” that would be led by a corporate partner, investigators said.
But the corporate partners, bearing such innocuous names as BMC Enterprises, were all controlled by executives such as Lopuszynski and received 85% of any investments by charging a hidden “management fee,” prosecutors said.
BMC--which investigators said was rumored to stand for “Bring More Cash”--was involved with one investment for Matchmaker Network, a 900-number dating service touted in an infomercial featuring game show host Bob Eubanks. Salesmen told potential investors to expect returns as high as 300% on the ventures.
Regulators had already obtained court judgments and injunctions barring many of the defendants from participating in telemarketing activities. Lawyers for the Federal Trade Commission obtained judgments against several defendants in January. The Securities and Exchange Commission won judgments last year.
But the court awards are likely to result in collection of no more than pennies on the dollar for investors.
“They just went through the money,” SEC staff attorney Michael Wilner said.
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* SEC BATTLEGROUND: The war on small-stock scams is far from over, agency says. C1
