US v. Thomas P. Norton, aka "Tom Riley" on May 29, 2003

US v. Thomas P. Norton, a/k/a "Tom Riley," David M. Freeman, E. Douglas Mitchell,
and
Patricia M. RileyandUS v. Ronald W. Johnson, James V. Miles, and Gary Spink (PowerSource, Premier, Paramount, Paragon, Pinnacle, Liberty Tel, Telcom Plus, UST)

Fraud Case
Seven individuals are facing federal criminal charges in connection with their alleged involvement in the sales of investments involving PowerSource Corporation, Premier Energy Group, Paramount Energy Group, Paragon Energy Group, Pinnacle Energy Group, Liberty Tel, Telcom Plus, TelCom West, TelCom East, and/or UST.
In United States v. Thomas P. Norton, a/k/a "Tom Riley," David M. Freeman, E. Douglas Mitchell, and Patricia M. Riley, No. 03-CR-20425-CR-COHN, all four named defendants were indicted by a Miami grand jury on May 29, 2003. Counts 1-2 charge Norton with wire fraud. Count 3 charges Norton, Freeman, and Mitchell with conspiracy to commit wire and mail fraud. Counts 4-8 charge Norton and Freeman with wire fraud. Counts 9-10 charge Norton and Riley with criminal contempt. Count 11 charges Norton and Riley with conspiracy to defraud the United States. Count 12 charges Norton, Freeman, and Mitchell with conspiracy to commit money laundering.

Defendants Thomas P. Norton (also known as "Tom Riley") and Patricia M. Riley are scheduled to go on trial on November 3, 2003, on charges of criminal contempt and conspiracy to defraud the United States. Defendants Thomas P. Norton, David M. Freeman, and E. Douglas Mitchell are scheduled to go on trial on December 1, 2003, on charges of wire fraud, conspiracy to commit wire fraud and mail fraud., and conspiracy to commit money laundering. Both trials will take place before Federal District Judge James I. Cohn at 299 East Broward Blvd., Fort Lauderdale, Florida.

In United States v. Ronald W. Johnson, James V. Miles, and Gary Spink, No. 03-20426-CR-MOORE, all three named defendants pled guilty on May 29, 2003, to one count of conspiracy to commit wire and mail fraud. Johnson, Miles, and Spink currently are scheduled to be sentenced at 10 a.m. on October 20, 2003, by Federal District Judge K. Michael Moore at 99 NE Fourth Street in Miami, Florida.

Court hearings are often delayed and these sentencing and trial dates might change.
Charges contained in the indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty it is to determine guilt or innocence.

Update 10/21/03
Five defendants have admitted that they defrauded investors by making misrepresentations and concealing important facts about the investment opportunities involved in this case:
• Ronald W. Johnson was sentenced on October 20 to a prison term of 3 years and 5 months. Johnson was the president of Power Capital Funding Group, which arranged for telemarketers to raise money on behalf of PowerSource. Johnson pled guilty to conspiracy to commit wire and mail fraud.
• James V. Miles was sentenced on October 20 to a prison term of 2 years and 6 months. Miles worked with Johnson at Power Capital Funding Group. Miles pled guilty to conspiracy to commit wire and mail fraud.
• Gary Spink was sentenced on October 20 to a prison term of 1 year and 9 months. Spink was the president of Power Capital Management Group, the initial managing partner of the four partnerships. Spink pled guilty to conspiracy to commit wire and mail fraud.
• Thomas P. Norton, also known as "Tom Riley," pled guilty on October 20 to wire fraud and conspiracy to commit wire fraud in connection with the California electricity business and an earlier scheme in which consumers invested in a company selling prepaid telephone service. The names of the entities involved in those investments included Liberty Tel, Telcom Plus, TelCom West, TelCom East, and UST. Norton operated a telemarketing sales room that made sales calls to consumers throughout the United States. Norton is scheduled to be sentenced at 4 p.m. on January 22, 2004, by Federal District Judge James I. Cohn in the central courtroom at 300 N.E. 1st Avenue, Miami, Florida.
• David Freeman pled guilty on October 20 to wire fraud and conspiracy to commit wire fraud in connection with the California electricity business. Freeman was a telemarketer who worked in Norton's telemarketing sales room. Freeman is scheduled to be sentenced at 4 p.m. on January 22, 2004, by Federal District Judge James I. Cohn in the central courtroom at 300 N.E. 1st Avenue, Miami, Florida.
In addition, Mary Patricia Riley pled guilty on October 20 to conspiracy to defraud the United States. Riley, who is Norton's wife, helped her husband try to conceal from the Federal Trade Commission that Norton was engaged in the business of telemarketing despite a 1994 federal court order that prohibited Norton from telemarketing without first posting a $5 million bond. Riley is scheduled to be sentenced at 4 p.m. on January 22, 2004, by Federal District Judge James I. Cohn in the central courtroom at 300 N.E. 1st Avenue, Miami, Florida.

Restitution
Federal law requires a judgment to be entered against each defendant for the full amount of the fraud loss, regardless of the defendant's ability to pay. Such a judgment was entered on October 20 against Johnson, Miles, and Spink for the full amount of the $2,393,840 victim loss in this case. The entry of such a judgment does not mean, however, that the defendants have the assets to pay the judgment. Johnson was ordered to pay $250,000 toward restitution by January 5, 2004. Such a restitution payment would enable each victim to be repaid approximately 10% of the original investment. The Probation Office in Miami is responsible for administering restitution and has been in contact with the victims of these offenses.

Update 11/19/03
The sole remaining defendant in this case who has not pled guilty, E. Douglas Mitchell, is scheduled to stand trial on December 15, 2003, before District Judge James I. Cohn at 299 East Broward Blvd., Fort Lauderdale, Florida. The case number is No. 03-CR-20425-CR-COHN. Mitchell is charged with conspiracy to commit wire and mail fraud.

Update 12/12/03
At a pretrial hearing on December 11, 2003, the court granted the defendant's motion for a continuance of the trial date. The trial was rescheduled for April 19, 2004, with a calendar call on April 15.

Update 1/23/04
Three more defendants were sentenced on January 22, 2004.
• Thomas P. Norton (also known as "Tom Riley") was sentenced to 5 years in prison.
• Patricia Riley, Norton's wife, was sentenced to 2 years in prison.
• David M. Freeman was sentenced to 2 years and 6 months in prison.
Norton and Riley each were ordered to pay up to $2,042,250 in restitution, and Freeman was ordered to pay $1,030,000 in restitution. The judge ordered all three defendants to pay 50% of any prison wages or $25 per quarter in restitution while they are in prison, and to pay 10% of their monthly earnings to restitution after their release from prison.
The sole defendant who has not pled guilty, E. Douglas Mitchell, remains scheduled for trial in Fort Lauderdale beginning April 19, 2004.

Update 5/7/2004
A jury in Fort Lauderdale, Florida, found E. Douglas Mitchell, the president of PowerSource Corporation, guilty of conspiracy to commit mail and wire fraud. After a two-and-a-half-week trial, the jury on May 4, 2004, returned a verdict of guilty in three hours. Numerous victims, as well as other witnesses, testified during the trial. Mitchell is scheduled to be sentenced at 10:30 a.m. on July 16, 2004, by Federal District Judge James I. Cohn, 299 East Broward Blvd., Fort Lauderdale, Florida.

Update 7/19/2004
The district court entered an Order on June 18, 2004, directing defendant Gary Spink to pay $50,000 toward the restitution balance within 90 days. The court directed Spink to liquidate an SEP (small employer pension plan) and a universal life insurance policy. Spink remains jointly and severally liable on the full restitution balance.
The sentencing of E. Douglas Mitchell, which was scheduled to take place before Judge Cohn in Fort Lauderdale on July 16, 2004, has been postponed until September 24, 2004.
The sentences of Ronald W. Johnson, James V. Miles, and Gary Spink were reduced during a hearing before Judge Moore in Miami on July 7, 2004. Because Johnson, Miles, and Spink cooperated in the government's investigation, the government filed what is known as a "Rule 35" motion that asked the Court to reduce their sentences because they provided substantial assistance in the prosecution and convictions of Thomas P. Norton, David M. Freeman, Patricia Riley, and E. Douglas Mitchell. The government requested that Johnson's 41-month prison sentence be reduced by one-third, that Miles' 30-month prison sentence be reduced by one-third, and that Spink's 21-month sentence be reduced by one-half. Once the government files a Rule 35 motion, the Court has discretion to reduce the sentence as much as it determines to be appropriate. The Court reduced the sentences as follows:
• Johnson's sentence was reduced to 13 months: 6.5 months of imprisonment, followed by 6.5 months of home detention.
• Miles' sentence was reduced to 10 months: 1 month of imprisonment, followed by 9 months of home detention.
• Spink's sentence was reduced to 10.5 months of home detention.
The Court's original restitution order remains in effect.
Update 9/3/2004
Defendant E. Douglas Mitchell, who was convicted in May 2004 after a two-week trial, died on June 30, 2004. Under the law in the 11th Circuit, the court must dismiss an indictment when a defendant dies before completion of an appeal. The court dismissed Mitchell's indictment on August 9, 2004. Thus, there will be no order of restitution for Mitchell's victims.

Update 4/19/2005
On January 25, 2005, Thomas P. Norton filed a habeas petition to vacate his sentence. Norton, who is incarcerated, claims that he had ineffective assistance of counsel. The government filed a memorandum of law and fact in opposition to the habeas petition on March 25, 2005.