William Edward Marlin Arraigned and Pleads Guilty in U.S. Federal Cour
Bill Mercer, United States Attorney for the District of Montana, announced today that during a federal court session in Missoula on June 18, 2009, before U.S. District Judge Donald W. Molloy, WILLIAM EDWARD MARLIN, a 54-year-old resident of Los Angeles, California, was arraigned and pled guilty to mail fraud and money laundering. Sentencing is set for October 22, 2009. He is currently released on special conditions.
In an Offer of Proof filed by the United States, the government stated it would have proved at trial the following:
MARLIN claimed to be a Hollywood businessman who had formed numerous companies that were allegedly associated with the film industry. Since 1992, MARLIN has been associated with six entertainment related companies. MARLIN started Starmax Entertainment in 2004 and solicited over a million dollars of investments for that alleged business. While running Starmax, MARLIN would use aliases when soliciting investors and funding for the business. In 2006, the California Board of Corporations issued a cease and desist order to shut the company down since investors had never been paid.
Once Starmax was issued a cease and desist order, MARLIN adopted the alias K.H. and started a new business called Children's Family Films (CFF). MARLIN knew the real K.H. and paid him $2,500 to use his name on bank accounts and other documents. MARLIN adopted the alias in order to avoid detection by state regulators and former investors.
Once MARLIN started CFF he recruited a "boiler room" crew in order to solicit investors nationwide. This crew consisted of several individuals who would "cold call" investors and try to sell them investment shares in CFF. Once a caller appeared interested, MARLIN and other co-conspirators would promise investors that they would receive 100% of their investment back in three months and then they would in addition receive thousands of dollars per month for the next one to three years. The amount of the purported return was based on the amount of the initial investment. Investors were told that companies like Home Box Office (HBO) and Disney would purchase and play CFF movies. In turn, the companies would allegedly pay CFF for the movies and the profits would be passed on to CFF investors. In reality, CFF never had any contracts with Showtime, HBO, Disney or any other media or cable television company. CFF never received any payments from any of these companies.
In furtherance of the scheme, MARLIN also hired Tyrone Dyse to perform general administrative duties for MARLIN. MARLIN used Dyse to pick up and send mail via the United States Postal Service and Federal Express, deposit checks, deliver investment materials, cash checks and pay other boiler room co-conspirators. Dyse deposited an estimated $50,000 of investor monies per month into the CFF bank accounts. At MARLIN'S direction, Dyse opened a cellular phone account using an alias. The phone number was then used by MARLIN, Dyse and other co-conspirators to call CFF investors. Also at MARLIN'S direction, and using aliases, Dyse sent proceeds from CFF via Western Union wire transfers to other co-conspirators.
MARLIN also asked Dyse and other co-conspirators to vouch for the legitimacy of CFF by posing as several alleged prior investors in CFF. Using aliases, Dyse and others would be referred to interested investors to legitimize CFF's investments. Dyse and others would confirm to the interested investors that their fictitious investments in CFF had yielded double and triple returns
MARLIN'S scheme involved victims from all over the country, including Montana. E.J. resides in Bozeman, Montana and was first contacted by an unindicted co-conspirator who called on behalf of CFF. The caller stated that CFF produced "B Movies" in the children's film industry and sold them to companies such as HBO, STARZ, Showtime, Disney, and to film companies overseas. The caller asked E.J. if she would be interested in investing with CFF. E.J. was offered one "Unit" of investment in the company for $20,000. The investment offering was described as an opportunity to buy into a "partnership" arrangement with CFF. E.J. was told that the company could guarantee a return of 5 to 1 on her initial investment of $20,000 and the company would guarantee that she would get her initial investment of $20,000 back in one lump sum in exactly three months time. The caller also told E.J. that she would receive payments of $1,800 a month for 36 months following the return of her initial investment.
E.J. was then sent a subscription agreement and an investment packet via Federal Express. Prior to signing the subscription agreement, E.J. contacted the "references" provided by CFF. At MARLIN'S direction, Dyse posed as an alleged investor to convince E.J. to invest. Shortly after signing the subscription agreement, E.J. was contacted by a person claiming to be K.H., who said he was a "General Partner" for CFF. K.H. was an alias for MARLIN. K.H. made numerous claims about how E.J.'s investment would perform and the progress of current CFF films. E.J. was convinced. On April 14, 2007, E.J. sent her initial investment of $20,000 via Federal Express from her home in Bozeman, Montana to an address in Hollywood, California used as a mailing address by CFF. E.J. subsequently facilitated investments in CFF for numerous family and friends in Montana. Altogether E.J. and her friends and family invested approximately $160,000 with CFF.
After CFF failed to produce any returns for E.J. and the other Montana investors, she tried repeatedly to contact CFF and K.H. Dyse, using an alias, spoke to E.J. several times in an attempt to placate her concerns about the lack of a return on the investments she and her family and friends had made with CFF. Neither E.J. nor any Montana investor received any money back.
Investors' money was used to further the scheme and pay for the personal expenses of MARLIN, Dyse and the other co-conspirators. The bank records for CFF indicate that regular checks were issued and drawn off of the CFF bank account payable to MARLIN - including check number 1417 which was issued on April 19, 2007. Along with the checks, regular transfers were also seen between the CFF account and accounts held by MARLIN. All told, CFF received approximately $1,754,203.44 in illegitimate funds from 2006 to 2008.
CFF never produced a film, product, video or any other media and no investor ever received a return on their investment.
Dyse pled guilty to federal charges and is awaiting sentencing.
MARLIN faces possible penalties of 20 years in prison, a $500,000 fine and 3 years supervised release.
Assistant U.S. Attorneys Ryan M. Archer and Jessica T. Fehr prosecuted the case for the United States.
The investigation was conducted by the Federal Bureau of Investigation.
A copy of the Offer of Proof can be obtained by contacting Sally Frank at (406) 247-4638.