FOR IMMEDIATE RELEASE:
Tuesday - September 28, 2004
WILMINGTON - United States Attorney Frank D. Whitney announced that LOUIS MICHAEL LAZORWITZ was sentenced in federal court in Wilmington on Tuesday, September 28, 2004, for conspiracy to commit mail fraud, wire fraud, and securities fraud; the commission of securities fraud; and conspiracy to commit money laundering. Senior U. S. District Judge James C. Fox sentenced LAZORWITZ to 300 months imprisonment and three years of supervised release. Also, Judge Fox scheduled a hearing on restitution for December 13, 2004, to give victims of the fraud an opportunity to present their individual claims for restitution. Following his sentencing, LAZORWITZ was taken into custody immediately by the United States Marshals Service.
Pursuant to a plea agreement with the United States Attorney's Office, LAZORWITZ pled guilty previously to a three-count Amended Criminal Information.
According to the Amended Criminal Information and evidence presented in court, LOUIS MICHAEL LAZORWITZ, 58, of Houston, Texas, was the co-founder and one of two general partners of Tri-Star Investment Group, LLC. In that capacity, he marketed "high yield" investment opportunities to potential investors around the United States. Further, he conducted sales seminars, managed investor monies, and communicated directly with investors and sales agents known as "facilitators." Also, he purported to run businesses under the names of Lazor Consulting, Inc., Lazor Limited, and Aerospace Travel. Additionally, he had a business interest in Midnight Resources, Inc. All four business entities received assets from the fraud without any legitimate claims to those assets.
The Amended Criminal Information charged that between November 1997 and March 2001, LAZORWITZ conspired with other persons to engage in a prime bank investment scheme whereby they stole more than $20,345,000.00 from more than 900 victims in 37 states. He and a co-conspirator, James Charles Reives, set up an investment club, Tri-Star Investment Group. Although incorporated in North Carolina, Tri-Star maintained offices and bank accounts in North Carolina, Georgia, and Texas. Jackie Dobson Pritchett, another co-conspirator, was hired to be an office manager for the Georgia office; Reives handled the Raleigh office; and LAZORWITZ handled the Texas office.
Through Tri-Star, the conspirators solicited monies from investors in $10,000.00 increments and told them that the monies would be pooled and invested in off-shore bank accounts, which would produce 20% per month returns for each investor. The defendants expanded the scheme to insulate themselves by creating sales persons, known as "facilitators," who received a commission for each new investor brought into the club.
Rather than investing the monies, the conspirators implemented a "ponzi" scheme, in which they paid investors a "return" on their investments from the funds which those and other investors had invested. The conspirators lulled investors into a sense of security by the issuance of monthly account statements known to be false, and which regularly showed earned "interest" of 20% per month after a 90-day waiting period. In addition, after the North Carolina Securities Division notified the conspirators of an investigation in June 1999, the conspirators created and provided false documents to investigators and repeatedly gave investors false and misleading information about the nature of the investigation in order to lull investors into inaction and to prevent further investigation of the scheme. The "ponzi" scheme eventually collapsed, but not before the conspirators spent millions of dollars on themselves for personal expenditures, such as luxury automobiles, jewelry, international travel, and personal investments.
After pleading guilty on December 8, 2003, to conspiring to commit mail fraud, wire fraud, and securities fraud, Reives and Pritchett were sentenced on April 26, 2004, in Wilmington. Reives, of Raleigh, N. C., was sentenced to 60 months imprisonment and three years of supervised release. Pritchett, of Ellijay, Georgia,
received a sentence of 57 months imprisonment and three years of supervised release. Also, both were ordered to pay restitution to their victims.
Investigation of the case was conducted by the Federal Bureau of Investigation and the Securities Division of the N. C. Department of the Secretary of State.
North Carolina Secretary of State Elaine F. Marshall said, "This sentence is a huge win for the investing public in North Carolina, and it sends a clear message to anyone seeking to scam investors out of their hard-earned money that these are serious crimes and are going to be treated as such."
U. S. Attorney Whitney said any victims of the Tri-Star investment fraud who wish to submit claims for consideration for restitution may contact his office toll free at 1-877-847-0947.
Assistant U. S. Attorney Banumathi Rangarajan prosecuted the case for the United States.
News releases are available on the U. S. Attorney's web page at www.usdoj.gov/usao/nce within 48 hours of release.