Chubbuck Man Sentenced for Wire Fraud
Ordered to Pay Nearly $833,000 in Restitution to Victims
POCATELLO – Brad Lee Demuzio, 35, of Chubbuck, Idaho, was sentenced today in United States District Court to 46 months in prison for wire fraud, U.S. Attorney Wendy J. Olson announced. Chief U.S. District Judge B. Lynn Winmill also ordered Demuzio to serve three years of supervised release and pay restitution of $832,978 to the victims. He pleaded guilty to the charge on August 23.
According to the plea agreement, in December 2007, Demuzio formed an entity, Demuzio Capital Management LLC, for the purpose of trading in foreign currency markets. Subsequently, he entered into partnership agreements with friends, family, and others. The agreements provided that investors would make cash contributions to the partnership, for the purpose of generating a return on the investment by Demuzio trading in foreign currency markets, and Demuzio and the investors would share equally in the profits and losses. From 2008 to 2011, Demuzio solicited and received approximately $1.8 million in capital investments from approximately 16 investors.
According to the plea agreement, Demuzio did not invest all of the investors’ capital contributions in the foreign currency markets. Rather, he used a large portion of the funds to pay for personal expenses, including home mortgage payments, retail shopping, groceries, and gasoline, and to repay contributions of prior investors. Of the sums Demuzio did invest in the foreign currency markets, he lost significant amounts. To conceal the losses, beginning in 2010, Demuzio sent investors false email updates, which misrepresented that he was earning significant returns.
In June and July 2011, two investors requested that Demuzio return their principal. After bouncing checks to the investors, Demuzio represented that he could not provide the funds because he was under investigation by the U.S. Commodity Futures Trading Commission (CFTC), and his assets were frozen. Demuzio provided the investors with two letters referencing the investigation, bearing the CFTC seal, and purportedly signed by its Deputy General Counsel. Later, Demuzio provided the investors with a purported “Order of Dismissal” of the investigation from an Administrative Law Judge, also bearing the CFTC seal. The defendant forged the three documents and provided them without the knowledge and authorization of the CFTC Deputy General Counsel and Administrative Law Judge. According to the plea agreement, Demuzio admitted he misappropriated and lost $805,273 of investor money.
“Today’s sentence is a just punishment for Mr. Demuzio’s deceptions and for the financial harm he caused his investors,” said Olson. “The Court’s restitution order is an important step in achieving justice. It ensures that any assets of Mr. Demuzio’s will go toward repairing the financial damage he did to his victims.”
The case was investigated by the Federal Bureau of Investigation and the CFTC.
In a related case, Demuzio and his company, Demuzio Capital Management, LLC, are charged by the CFTC in a civil complaint with operating a fraudulent $1.8 million commodity pool and foreign currency Ponzi scheme.
Today's announcement is part of efforts underway by President Obama's Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys' offices and state and local partners, it's the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
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