Scotts Valley Investment Company Charged In $60 Million Fraud Scheme
SAN JOSE, Calif. – A federal grand jury in San Jose indicted John Geringer and Christopher Luck of Scotts Valley, Calif., and Keith Rode of Franklin, Wisc., on Wednesday with mail fraud, wire fraud, securities fraud, money laundering and conspiracy to commit mail and wire fraud, United States Attorney Melinda Haag announced.
According to the indictment, Geringer, 48, Luck, 56, and Rode, 45, are alleged to have been partners in the management of an investment company called Geringer, Luck, and Rode, LLC (GLR). GLR managed an investment fund called GLR Growth Fund. The partners recruited individuals to invest in the GLR Growth Fund. The partners assured these investors that the fund would invest in a diversified array of assets, including publicly traded equities and direct private company investments. Instead, according to the indictment, after 2009 the partners diverted investor funds almost exclusively into two privately held companies. The indictment alleges that between 2006 and 2009, Geringer misrepresented his investment performance to his partners and his investors. Then, according to the indictment, after Luck and Rode learned of Geringer’ s misrepresentations they continued to recruit new investors knowing that any investment would not be allocated among diversified assets, as promised, but rather would go entirely towards private companies. GLR received more than $60 million from investors, but diverted half of the money to themselves and private companies in which they held an interest.
Geringer, Luck, and Rode are scheduled to make their initial appearance in federal court in San Jose on Jan. 17, 2013, at 1:30 p.m. before United States Magistrate Judge Howard R. Lloyd.
The maximum penalty for each count of conspiracy to commit mail and wire fraud in violation of Title 18, United States Code, Section 1349, and for the substantive mail and wire fraud counts, is 20 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense, plus restitution. The maximum penalty for each count of securities fraud in violation of Title 15, United States Code, Sections 78j(b) and 78ff, and Title 17, Code of Federal Regulations, Sections 240.10b 5 and 240.10b5 2, is 20 years in prison and a fine of $5 million, plus restitution. The maximum penalty for each count of engaging in monetary transactions in property derived from specified unlawful activity, in violation of Title 18, United States Code, Section 1957(a), is 10 years in prison and a fine of $250,000, or twice the amount of the criminally derived property involved in the transaction, plus restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Jeff Schenk is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Nina Williams. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
In May, the Securities and Exchange Commission filed civil securities fraud charges against Geringer and the GLR entities in United States District Court in San Jose. Today, the SEC sought court approval to add additional civil securities fraud charges against Luck and Rode. The SEC’s action seeks permanent injunctions against future violations of securities laws, disgorgement of ill gotten gains plus prejudgment interest, and civil monetary penalties.
Please note, an indictment contains only allegations against an individual and, as with all defendants, Geringer, Luck and Rode must be presumed innocent unless and until proven guilty.