Federal Trade Commission (FTC) (CLOSED)
Most Recent Update 7/6/2006 (See end of document)
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. The press
release issued by the United States Attorney's Office for the Southern
District of Florida can be viewed by clicking on the link.
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 2/04
No change in status.
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. The press release, dated May 5, 2004, issued by the United States Attorney's Office for the Southern District of Florida can be viewed by clicking on the link.
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 sentenced 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.
Update 7/6/2006
On September 29, 2005, United States District Judge James I. Cohn denied defendant Thomas Norton's amended habeas petition to vacate his sentence. The court's case file is now closed.
Information about a defendant's prison release date can be obtained by accessing the Federal Bureau of Prison website at www.bop.gov, and clicking on the "inmate locator" link.
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