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Robert Trigaux

In Tampa Bay, 4 Lou Pearlman pitchmen who sold Ponzi investments heading to jail

12

December

loupearlmanincuffsphelanebenhack.Wake up and good morning. It's been more than three years since Orlando Ponzi schemer and boy band producer Lou Pearlman was sentenced to 25 years in jail. Read Helen Huntley's St. Petersburg Times piece from 2008 about that. (Photo: Pearlman in custody, by Phelan Ebenhack.)

Now comes justice, finally, for some of Pearlman's go-fers, the sales guys from  Tampa Bay who convinced area investors to cough up big bucks to invest in Pearlman's financial schemes, only to lose most or all of their funds.

On Friday, four Tampa Bay area men were sentenced to federal prison for their part in the fraud scheme led by Pearlman. They are:

* Michael J. Crudele, 50, of Lithia. Crudele  was identified in July 2010 by prosecutors as the highest commissioned sales-agent for one of Pearlman's financial schemes. He was indicted by a grand jury back then 20 charges. Crudele began selling the Employee Investment Savings Account (EISA) program in 1994 and through his company, AEGIS Consulting, solicited other people to sell the program, the indictment said. Crudele also sold stock in TCA Travel. Here's more from the Orlando Sentinel.

* Steven B. Rodd, 45, of Tampa. According to the indictment, Rodd was barred from selling securities by the State of Florida in 1998 and again in 2003. Despite these prohibitions, Rodd and his partner allegedly began selling an unregistered security named EISA through two companies, the Churchill Financial Group and Oxford Financial. The EISA program was supposedly an investment in the Pearlman company TransContinental Airlines. In reality, EISA was nothing more than an investment fraud. Together with his business partner, Rodd sold over $32 million worth of the EISA program to over 250 investors living in Pasco, Pinellas, and Hillsborough Counties from 2005 through 2006. Read more from this FBI news release.

* William P. Kress, 55, of Largo. Kress sold the EISA program in the Tampa Bay area, even though he knew or should have known the program was an unlicensed security and he was not legally allowed to sell it. Prosecutors say Kress and at least one co-conspirator sold the EISA program to 355 people who invested more than $32 million from 2004 through 2006. Kress and at least one other co-conspirator executed a "bait and switch" scheme targeting elderly investors. From 2004 to 2007, Kress received about $800,000 in commissions from selling the EISA program. Read more from this Orlando Sentinel story.

* And  Gary V. Leone, 58, of Valrico. One area investor, George Menier of New Port Richey, in 2006 told the St. Petersburg Times that he went to William Kress of Churchill Financial Group in Clearwater to buy a certificate of deposit. He would invest $90,000. "He said he could get me in with EISA, an employee-only account along with officers of the company and friends, at 6.08 percent. He said it's FDIC (insured) and I said 'fine' and gave him a check for 50 grand and we went from there." Menier later deposited an additional $40,000. Menier said Churchill bought the Trans Continental investment for him through Tampa insurance agent Gary Leone.

All four Pearlman salesmen had all been barred from selling unregistered securities in Florida when they began selling Transcontinental's EISA. The investment was ultimately a fraud orchestrated by Pearlman, the U.S. Attorney's Office in Tampa said. Read More from this St. Pete Times story.

Crudele, Rodd and Kress were sentenced to three years in federal prison each. Leone received a 26-month sentence.

-- Robert Trigaux, Business Columnist, St. Petersburg Times, soon to become the Tampa Bay Times

 

[Last modified: Monday, December 12, 2011 10:03am]

    

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