| FOR IMMEDIATE RELEASE September 26, 2008 WWW.USDOJ.GOV/USAO/CAN |
SAN JOSE-- United States Attorney Joseph P. Russoniello announced that Rebecca Solomon and Terry Solomon pleaded guilty today to conspiracy to commit mail and wire fraud, wire fraud, and money laundering. This guilty plea is the result of a two-year investigation by the Federal Bureau of Investigation and the Internal Revenue Service–Criminal Investigation.
In pleading guilty, Mr. and Ms. Solomon admitted that in 2005 and 2006, they defrauded members of the public through two fraudulent investment schemes which they devised and executed in the Northern California area. The Solomons solicited investments from individuals under the false and fraudulent pretense that the solicited funds would be invested in a leasing company dealing in telecommunication hardware in China. In a separate scheme, the Solomons also solicited investments under the false and fraudulent pretense that the solicited funds would be invested in the purchase and re-sale of a multi-million dollar diamond. The Solomons never actually made these promised investments, and instead used the funds for personal gain.
The China Leasing Fraud
In the China leasing fraud scheme, the Solomons promoted an investment plan in which they falsely told investors that part of their funds would be invested in a company called New Century International Leasing, or “NCIL,” a leasing company dealing in telecommunication hardware in China. The Solomons encouraged investors involved in this investment scheme to transfer money into their bank accounts for 60-day term investments with promises of guaranteed 20% returns at the end of 60 days. In furtherance of the scheme, The Solomons then encouraged investors to roll their initial investments into second and third rounds of investments based upon the promise of a higher ultimate return. The Solomons encouraged investors to recruit friends and family members to participate in the scheme, and provided them with financial incentives for successfully recruiting additional investors.
The Solomons did not, in fact, invest the funds solicited in a legitimate investment scheme in China. To the contrary, the Solomons spent the money obtained through this investment scheme in part on expensive hotel stays, luxury items, personal vacations, and jewelry. They also used the money to pay for tuition for their children at private schools. They fraudulently obtained approximately $14 million from investors pursuant to this scheme.
The Diamond Fraud
In addition to the above-summarized scheme, Rebecca and Terry Solomon executed a separate fraudulent scheme in 2004 in which Rebecca and Terry Solomon falsely claimed to investors to have special, inside information about purchasing a very large, valuable, flawless diamond on the wholesale market. The Solomons solicited investor funds by explaining to investors that the funds were needed to secure the diamond, transport it to a known buyer in Japan, and sell it for a considerable profit. Upon receiving the funds, the Solomons deposited investor funds solicited in connection with the plan to purchase the diamond into a business account controlled by Rebecca Solomon under the name Kristoffer International, Inc. When asked by investors when they could reasonably expect a return on their investments, the Solomons repeatedly assured investors that the diamond transaction had been completed and investor returns would be forthcoming. These assurances were false. In fact, no diamond transaction ever occurred, and no returns were ever realized pertaining to an actual diamond transaction. To the contrary, the Solomons spent the money, as with the China leasing fraud, on hotel stays, luxury items, personal vacations, jewelry, and tuition for their children’s private schools. The Solomons fraudulently obtained approximately $4 million from investors pursuant to this scheme.
Mr. Solomon, 59, and Ms. Solomon 51, of Tiburon, were indicted by a federal Grand Jury on December 20, 2006. The Solomons were charged with one count of conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. § 371; 20 counts of wire fraud, in violation of 18 U.S.C. § 1343; 3 counts of mail fraud, in violation of 18 U.S.C. § 1341; and one count of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956. In addition, Rebecca Solomon was charged with 6 counts of money laundering, in violation of 18 U.S.C. § 1956, and 7 counts of engaging in monetary transactions with funds derived from a specified unlawful activity, in violation of 18 U.S.C. § 1957. Terry Solomon was further separately charged with four counts of engaging in monetary transactions with funds derived from a specified unlawful activity, in violation of 18 U.S.C. § 1957. Each defendant pleaded guilty to conspiracy to commit mail and wire fraud, one count of wire fraud, and one count of engaging in a monetary transactions with funds derived from a specified unlawful activity.
The Solomons are currently in custody. The sentencing of the Solomons is scheduled for December 10, 2008 at 9:00 a.m. before Judge Jeremy Fogel in San Jose. The maximum statutory penalty for the conspiracy count in violation of 18 U.S.C. § 371 is five years and a fine of $250,000. The maximum penalty for the wire fraud counts in violation of 18 U.S.C. § 1343 is 20 years imprisonment and a fine of $250,000. The maximum penalty for the violation of 18 U.S.C. § 1957 is 10 years imprisonment and a $250,000 fine. The plea agreement between the parties provide for a sentence of 78 months imprisonment to be followed by five years supervised release. 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.
The government has identified and seized assets of the Solomons that will be applied to the restitution owed by the Solomons to the victims. These assets include a Merdeces Maybach automobile, a Hummer, a Harley Davidson motorcycle, jewelry, and domestic and international currency. The FBI and IRS are continuing to investigate the existence and location of other assets.
The Solomons were overseas when they realized they were under investigation in 2006. In 2007 they were arrested in the Philippines based upon the warrant arising from this indictment. They were subsequently deported from the Philippines and appeared before the United States District Court in San Jose on December 10, 2007.
Jeff Nedrow is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Susan Kreider.
Further Information:
Case #: CR 06-00818-JF
A copy of this press release may be found on the U.S. Attorney’s Office’s website at www.usdoj.gov/usao/can.
Electronic court filings and further procedural and docket information are available at https://ecf.cand.uscourts.gov/cgi-bin/login.pl.
Judges’ calendars with schedules for upcoming court hearings can be viewed on the court’s website at www.cand.uscourts.gov.
All press inquiries to the U.S. Attorney’s Office should be directed to Jack Gillund at (415) 436-6599 or by email at Jack.Gillund@usdoj.gov.
This site does not contain all press releases or court filings and is not an official record of proceedings. Please contact the Clerk of Courts for the United States District Court for official copies of documents and public information.