May 7, 2004
Jury convicts ex-exec of fraud
After a two-week trial, the government said a Fort Lauderdale jury has found the president of a failed California energy company guilty of a fraud the government said cost investors nearly $2.5 million. Defendant E. Douglas Mitchell was on trial before Federal District Court Judge James I. Cohn, the government said. The jury convicted Mitchell, who was the president of Los Angeles-based PowerSource Corp., of one count of conspiracy to commit wire fraud and mail fraud, the government added. Mitchell faces up to five years in prison and his sentencing hearing is scheduled for July 16. PowerSource was one of a host of "energy service providers" that entered California's newly deregulated electricity industry in 1998, the government said. "According to evidence introduced during the trial, Mitchell grossly overstated his company's financial condition, its number of customers and its profit potential," the government said. "He also made numerous misstatements during telephone conference calls with investors and failed to disclose negative information about the company." Mitchell, the government said, was president of PowerSource from 1999 until 2002. A financial scheme, the government said, used spam e-mail, a Web site and fraudulent telemarketing sales calls to lure in victims across the country. The investors reportedly bought $10,000 units in a series of limited liability partnerships that were supposed to finance PowerSource. However, the government said only a small percentage of the investment actually went to the company, while sales commissions immediately consumed 61 percent of the investment. Some individuals invested as much as $80,000 in the scheme for which the government has already received guilty pleas from six other people. Those people have been sentenced to prison terms ranging from one to five years, the government added. The government said:
* Thomas P. Norton, who operated a telemarketing sales room in Hallandale Beach, was sentenced to five years in prison.
* His wife, M. Patricia Riley, was sentenced to two years in prison.
* David M. Freeman, who worked in Norton's telemarketing sales room, was sentenced to two-and-a-half years in prison.
* Three California-based men also involved in the scheme, Ronald W. Johnson, James V. Miles, and Gary Spink, received prison terms ranging from 21 months to 41 months. Trial attorneys Barbara T. Wells and Patrick Jasperse from the Office of Consumer Litigation, United States Department of Justice, are prosecuting the current case.
Source: The South Florida Business Journal, May 7, 2004
Jury convicts ex-exec of fraud
After a two-week trial, the government said a Fort Lauderdale jury has found the president of a failed California energy company guilty of a fraud the government said cost investors nearly $2.5 million. Defendant E. Douglas Mitchell was on trial before Federal District Court Judge James I. Cohn, the government said. The jury convicted Mitchell, who was the president of Los Angeles-based PowerSource Corp., of one count of conspiracy to commit wire fraud and mail fraud, the government added. Mitchell faces up to five years in prison and his sentencing hearing is scheduled for July 16. PowerSource was one of a host of "energy service providers" that entered California's newly deregulated electricity industry in 1998, the government said. "According to evidence introduced during the trial, Mitchell grossly overstated his company's financial condition, its number of customers and its profit potential," the government said. "He also made numerous misstatements during telephone conference calls with investors and failed to disclose negative information about the company." Mitchell, the government said, was president of PowerSource from 1999 until 2002. A financial scheme, the government said, used spam e-mail, a Web site and fraudulent telemarketing sales calls to lure in victims across the country. The investors reportedly bought $10,000 units in a series of limited liability partnerships that were supposed to finance PowerSource. However, the government said only a small percentage of the investment actually went to the company, while sales commissions immediately consumed 61 percent of the investment. Some individuals invested as much as $80,000 in the scheme for which the government has already received guilty pleas from six other people. Those people have been sentenced to prison terms ranging from one to five years, the government added. The government said:
* Thomas P. Norton, who operated a telemarketing sales room in Hallandale Beach, was sentenced to five years in prison.
* His wife, M. Patricia Riley, was sentenced to two years in prison.
* David M. Freeman, who worked in Norton's telemarketing sales room, was sentenced to two-and-a-half years in prison.
* Three California-based men also involved in the scheme, Ronald W. Johnson, James V. Miles, and Gary Spink, received prison terms ranging from 21 months to 41 months. Trial attorneys Barbara T. Wells and Patrick Jasperse from the Office of Consumer Litigation, United States Department of Justice, are prosecuting the current case.
Source: The South Florida Business Journal, May 7, 2004
