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    United States Attorney's Office
    Central District of California

    Thom Mrozek
    Public Affairs Officer

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    Release No. 07-157

    December 14, 2007


    Scam Bilked Investors across the Country out of more than $10 Million

    A Santa Barbara man has been indicted on federal fraud charges related to a securities fraud scheme that took more than $10 million from victims while the defendant was free on bond in a separate case involving false statements to a bank.

    De Elroy Beeler Jr., 50, who also maintained a residence in Tujunga, was named in a five-count indictment returned Thursday afternoon by a federal grand jury in Los Angeles.

    The indictment outlines a scheme in which Beeler and three unnamed co-conspirators solicited hundreds of victims across the country to purchase unregistered stock in, Inc. (also known as, Inc.) and several related shell companies. Beeler lured victims by falsely stating that and/or the shell companies would soon “go public” through an initial public offering on the Nasdaq Stock Market. Beeler allegedly claimed that, which was unsuccessfully trying to develop an Internet auction site, would be acquired by Ebay, Inc. for $20 per share. Beeler allegedly told some victims that former President George H.W. Bush had agreed to join’s board of directors. never conducted an IPO, Ebay never had any intention of acquiring (and had even sued for trademark infringement over the use of “bay” in its name), and former President Bush had never agreed to join’s board.

    Beeler and his co-conspirators also are accused of failing to disclose to investors that Beeler was a convicted felon; that there were several state securities regulatory actions against, Beeler, and his co-conspirators; and that and the related shell companies paid sales commissions to Beeler and other telemarketers of more than 50 percent.

    The indictment alleges that Beeler personally received more than $4.8 million in commissions for his role in the scheme.

    In the indictment returned yesterday, Beeler is charged with one count of conspiracy, three counts of mail fraud, and one count of criminal forfeiture related to the $4.8 million in commissions. If convicted, Beeler faces a statutory maximum sentence of 65 years in federal prison.

    Beeler was convicted of making false statements to a financial institution and was sentenced in June 2002 to three years in federal prison. It was prior to him serving that prison term that Beeler allegedly participated in the scheme. Following his release from prison in the false statements case in the summer of 2004, Beeler was placed on supervised release, but he was found to be in violation of the terms of his release and he was returned to prison for that violation earlier this year.

    An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.

    The case against Beeler is the result of an investigation by the Federal Bureau of Investigation and IRS-Criminal Investigation.


    Release No. 07-157
    Return to the 2007 Press Release Index