DEBRA W. YANG
United States Attorney
Central District of California
Thom Mrozek, Public Affairs Officer
January 18, 2005
SOUTHERN CALIFORNIA MAN PLEADS GUILTY TO SELLING
200-YEAR-OLD NATIVE HAWAIIAN SKULL ON eBay
Bringing the total number of defendants in the case to seven, federal prosecutors have charged four more individuals for their roles in the $45 million DFJ Italia Ponzi scheme that duped investors with promises of high-yield returns and stories of a royal Italian family with "political and diplomatic immunity in the United States."
From late 1996 until the Ponzi scheme collapsed in March 2000, DFJ and its sales force promised investors annual returns of 24 percent. DFJ operated on the bogus premise it was headed by a descendant of a royal Italian family that had a treaty with the United States that gave the company and its "knighted" members immunity from paying taxes. DFJ, which claimed a 700-year legacy, opened an Orange County office in 1997. As part of its claims to investors, DFJ said it had interests in hundreds of companies around the globe and controlled $60 billion that it used as collateral in "bridge gap" financing programs.
In fact, DFJ was a sham company that did not make promised investments and lulled investors with bogus account statements showing incredible profits. The majority of money solicited from investors went to the CEO of DFJ, a man known as "the Don."
The four defendants were charged late Friday in United States District Court in Los Angeles and in Santa Ana. All four have agreed to plead guilty to various charges related to the DFJ scheme.
The defendants are:
- Kenneth Kuczwaj, 46, of Temecula, the vice president in charge of the sales staff at DFJ who also held the title of "Capo di Asta," or chief of staff. Kuczwaj was charged with conspiracy to commit mail and wire fraud, two counts of making false statements to the Securities and Exchange Commission and tax evasion.
- Timothy G. Manno, 36, of Newport Beach, a DFJ salesman who was charged with conspiracy to commit mail fraud and tax evasion.
- John Reardon, 40, of Commack, New York, who was the chief financial officer at DFJ. Reardon was charged with one count of willful failure to file a tax return and failing to report $89,000 he earned at DFJ in 1999.
- John Loy, 42, of Costa Mesa, who also held the title of chief financial officer. Loy was charged with failing to supply information to the Internal Revenue Service by understating his DFJ income on his 1998 tax return.
All four defendants will be summoned to appear for arraignments in United States District Court in the coming weeks.
As part of the scheme, Kuczwaj and Manno, along with another DFJ defendant - Guy Scarpelli, 44, of Neptune, New Jersey - sold investments into DFJ after they learned that DFJ was a sham. Kuczwaj, Manno and Scarpelli also opened bank accounts in the names of fictitious businesses which were used to pay "investor returns." Moreover, in order to maintain and increase the investors’ confidence in DFJ, throughout the summer and fall of 1999, Kuczwaj and Scarpelli would tell investors that DFJ owned an insurance company which would sell the investor an insurance policy which would guarantee that the investment was safe. In fact, the purported insurance company was fictitious.
Scarpelli and the two remaining defendants in the DFJ case - Richard Glenn Dunham, 57, of Corona Del Mar, and Stephen A. Ceparano, 64, a certified public accountant from Northport, New York - pleaded guilty last year and are scheduled to be sentenced later this year.
The seven cases filed so far in DFJ Italia investigation are the result of an ongoing investigation by the Federal Bureau of Investigation and IRS-Criminal Investigation Division.
Release No. 05-011
Return to the 2005 Press Release Index
Return to the Home Page