Two Orange County men face fraud and money-laundering charges for their parts in a telemarketing scheme that allegedly bilked 300 elderly people out of more than $4.5 million.
A federal grand jury indicted Ahri Gareen, 41, of Huntington Beach, and John Locasio, 49, of Newport Beach late Wednesday. Locasio surrendered to the FBI on Thursday. Gareen was not in custody, prosecutors said.
From 1994 to 1996, Gareen and Locasio were sales managers for Dimension Capital Group, an Irvine boiler-room operation that sold investments in a chain of carwashes, federal investigators said.
In their telephone pitch, they promised investors a 12% annual return in exchange for cash up front to finance a chain of carwashes in Southern California, investigators said.
Gareen and Locasio received 15% to 20% commissions on the money they drew in. And they apparently drew in a bundle.
Investors nationwide each gave Dimension Capital tens of thousands of dollars, company bank records show. A Wyoming couple shelled out $100,000.
"You could build a lot of carwashes for that kind of money," Assistant U.S. Atty. Brent Whittlesey said.
But no carwashes were ever built. Investors were told their capital was backed by U.S. Treasury bills, but those also proved illusory. Some investors received interest payments paid with cash from newer participants, but then the scheme collapsed, Whittlesey said.
Early on, Dimension Capital was known as PAL Financial Services.
Lonny Remmers of Irvine ran both companies, changing the name in an effort to stay a step ahead of investigators, authorities said. Remmers received a four-year federal prison sentence last year after admitting he violated a 1996 court order to obey telemarketing laws.
Remmers previously operated a Santa Ana telemarketing company that sold more than $3 million worth of bogus investments in satellite television programming. That outfit was shut down by the Federal Trade Commission as part of a sweep dubbed "Operation Scofflaw," resulting in the 1996 order against Remmers.
Gareen pleaded guilty in 1995 to more than 90 counts of theft and fraud in connection with a phony prize scheme. He is on work release and was wearing an electronic monitoring device when prosecutors filed the new charges against him.
On Wednesday, Gareen was charged with five counts each of fraud and money laundering. Locasio faces five counts of fraud and four counts of money laundering. Each count potentially carries a sentence of five years in prison and a $250,000 fine.
Locasio was granted bail at a hearing Thursday but was detained overnight.
Whittlesey said the case drove home the message that consumers should hang up when they receive investment pitches over the phone.
"We've had casino boats, unreleased Beatles recordings, whatever you could make up," he said. "If you want to invest, deal with a person at a reputable firm with an office you can go to."