Man Pleads Guilty to Securities Fraud, Filing False Tax Returns
Las Vegas, Nev. - A Las Vegas resident who admitted to using fraudulent information and tactics to defraud buyers or sellers of securities in his companies, pleaded guilty on September 15, 2004, in U.S. District Court to securities fraud and tax fraud, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
LEWIS ESLICK, age 66, of Las Vegas, Nevada, pleaded guilty to a criminal information charging him with one count of Securities Fraud and two counts of Filing False Tax Returns. He is facing up to 20 years imprisonment and a $5,000,000 fine on the Securities Fraud count, and up to three years imprisonment and a fine of $500,000 on the tax counts.
According to the court records, between March 1990 and October 1996, LEWIS ESLICK incorporated Corporate Tours and Travel, Inc., Vista Medical Terrace, Inc., Travel Masters, Inc., and The Flintlock Company. ESLICK and his wife were the sole shareholders, officers and directors, but subsequently allowed the corporations to become dormant.
In October 1996, ESLICK became associated with Peter Berney, a Las Vegas stock promoter. Berney was in the business of creating public shell corporations from dormant private companies and registering their securities for sale in the over-the-counter stock markets. ESLICK reactivated his dormant corporations and installed Berney's nominees (persons who had no legitimate involvement in the corporations) as shareholders, officers and directors using fabricated and/or backdated corporate documents to make it appear that the nominees had long been associated with the companies.
ESLICK and Berney also retained attorneys to issue fraudulent legal opinions about the corporations, which they caused, along with other false reports, to be sent to the National Association of Securities Dealers in order to obtain trading clearance and to register the stock for sale.
ESLICK admitted in his Plea Memorandum that, in some instances after his corporations were approved for trading, he sold substantially all of the "free trading" stock held in the names of nominees and kept the proceeds for himself. On May 16, 1999, ESLICK sold 5,244,000 shares of Vista Medical Terrace, Inc., constituting 87 percent of the company's common stock, for $1,200,000.
ESLICK also admitted in his Plea Memorandum that in some instances he received "finders fees" for finding buyers for the fraudulent shell corporations created by Peter Berney. Between December 10, 1999, and January 11, 2000, ESLICK received $300,000 (through his Xaxon Corporation) from the law firm of Chapman & Flanagan, Ltd. for finding buyers, and failed to report the income on his personal or corporate tax returns.
The prosecution of LEWIS ESLICK is one of a series of investigations dating back to 1994 centering on the manufacture of fraudulent shell corporations. The investigation of Peter Berney uncovered a large group of people led by Berney, who, between 1994 and 1999, created and/or sold more than 60 shell companies for proceeds in excess of $35 million. Corrupt accountants, attorneys, stock transfer agents and others assisted Berney in his scheme.
On August 7, 2003, five individuals, including lawyers Daniel Chapman and Sean Flanagan of the Chapman & Flanagan law firm mentioned above, were indicted in the District of Nevada on conspiracy, racketeering, securities fraud, wire fraud, mail fraud, tax fraud, and money laundering charges for their alleged involvement in schemes involving the creation and sale of fraudulent shell corporations. That case is set for trial on January 18, 2005, before Judge Mahan.
ESLICK is scheduled to be sentenced before U.S. District Judge Kent J. Dawson on December 17, 2004, at 9:00 a.m. He is released on bond pending sentencing.
This case was investigated by Special Agents with IRS Criminal Investigation. It is being prosecuted by Assistant United States Attorney J. Gregory Damm.