Staten Island Man Charged In Manhattan Federal Court For Multimillion-Dollar Scheme Related To Purchase Of Maxim Magazine
Defendant Allegedly Provided Fabricated Bank Account Statements and Phony Emails, and Repeatedly Impersonated His Father, a Board Member of Several Public Companies, in Emails and Phone Calls
Preet Bharara, the United States Attorney for the Southern District of New York, Steven G. Hughes, the Special Agent-in-Charge of the New York Office of the United States Secret Service, and George Venizelos, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced that CALVIN DARDEN, JR., was arrested yesterday in connection with two schemes in which he defrauded victims of more than $8 million and attempted to defraud another victim of approximately $20 million. In one scheme, DARDEN tricked several lenders into providing more than $8 million in financing for the potential acquisition of Maxim Magazine and related assets. In the other scheme, DARDEN obtained $500,000 from a Taiwan-based company by falsely claiming that he was arranging for the New York Knicks to play an exhibition game in Taiwan. DARDEN surrendered yesterday to the Secret Service, and is expected to be presented later today in Manhattan federal court before U.S. Magistrate Judge Andrew J. Peck.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Calvin Darden, Jr., sought to mislead and deceive his victims at virtually every opportunity, and he used the full spectrum of fraudulent devices, including false documents, 'spoofed' emails, and outright impersonation. This Office has zero tolerance for those who allegedly engage in this type of conduct, especially when it is to the tune of millions of dollars.”
Secret Service Special Agent-in-Charge Steven Hughes said: “Partnerships fostered by the Secret Service’s Electronic Crimes Task Force have allowed our agency to focus resources and respond quickly to criminal activity such as this. The investigation and subsequent arrest in this case is another example of how the Secret Service strives to combat fraud and provide a secure cyber environment.”
FBI Assistant Director-in-Charge George Venizelos said: “Like we’ve seen time and time again, the defendant was up to the same worn-out tricks in an elaborate scheme of fake emails, fictitious bank accounts, and fabricated statements all to rip off unwitting investors. Everyone deserves the right to make an honest living, but not by lying, cheating, or at the expense of others. Today, Mr. Darden finds himself under arrest and in trouble with the law.”
According to the allegations contained in the Criminal Complaint unsealed today in Manhattan federal court:
DARDEN carried out two separate schemes in which he concocted an elaborate set of lies that included, among other things, phony emails, fabricated bank account statements, and his repeated impersonation of his father, a former corporate executive who sits on the Board of Directors of several publicly-traded corporations in the United States, during phone calls and in emails , to defraud multiple victims of more than $8 million and to attempt to defraud another victim of approximately $20 million.
The Maxim Fraud Scheme
In connection with the potential purchase of Maxim Magazine (“Maxim”) by a media company (the “Media Company”) associated with DARDEN and his father, DARDEN attempted to secure financing from various lenders, lying extensively to them to trick them into funding the Media Company’s purchase of Maxim.
As part of the scheme, in order to trick one of the lenders into believing they would receive sufficient collateral for their loan, DARDEN provided the lender with a fabricated bank account statement. The fabricated statement purported to be for an account held by his father and purported to show his father’s holdings in the stocks of at least three publicly-traded companies for which DARDEN’s father serves as a Director. His father’s alleged stock holdings in these companies were supposed to serve as collateral for the loans. In truth, however, the bank account statement was fake. In addition, DARDEN created, and sent to a lender, a phony email that purported to be from an employee of a bank verifying his father’s stock holdings.
Further, after one of the lenders put approximately $5.5 million in escrow pending the transfer of collateral, DARDEN paid a Russia-based email “spoofing” service to send an unauthorized and fraudulent email to the escrow agent to secure the release of the funds. Specifically, DARDEN had the spoofing service send an email that appeared to come from the lender’s email account and that authorized the escrow agent to release the escrow money. As DARDEN well knew, however, the lender did not send the email and did not authorize the release of the funds. Based on its receipt of the email, the escrow agent released approximately $4.9 million of the lender’s money towards the Media Company’s purchase of Maxim.
DARDEN also provided certain lenders with bogus emails purporting to be from senior executives of certain companies, including at least one publicly held corporation for which DARDEN’s father is a member of the Board of Directors. In one bogus email, the senior executive purportedly verified the stock holdings of DARDEN’s father that were supposed to be provided as collateral for the loan. Separately, when another lender conditioned its $20,000,000 loan on the creation of a cable channel based in part on Maxim, DARDEN provided the lender with a bogus email purporting to be from a senior executive of a cable television company confirming that the company was interested in creating a cable channel in connection with the Media Company’s purchase of Maxim. In fact, both emails were completely fabricated, and had not been authored or authorized by either of the executives who purportedly wrote them.
Additionally, as a part of the scheme, DARDEN repeatedly impersonated his father during phone calls and in emails, and forged his father’s signature on documents related to the potential purchase of Maxim.
The NBA Fraud Scheme
In a separate scheme, DARDEN tricked a particular company located in Taiwan into paying him $500,000 by falsely and fraudulently representing that, through a particular company purportedly operated in part by his father, he would arrange an NBA exhibition game in Asia involving the New York Knicks.
As part of that scheme, DARDEN falsely represented to the victim company that he and his father had meetings and discussions with, among others, the owners of the New York Knicks and NBA officials about an exhibition game in Asia. As he did in the Maxim fraud scheme, DARDEN also impersonated his father in multiple email communications with the victim company and forged his father’s signature on documents.
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DARDEN, 39, of Staten Island, New York, is charged with two counts of wire fraud, each of which carries a maximum term of 20 years in prison.
Mr. Bharara praised the outstanding investigative work of the Secret Service and FBI.
The case is being prosecuted by the Office’s Complex Frauds Unit. Assistant U.S. Attorney James Pastore, Jr., is in charge of the prosecution. Assistant U.S. Attorney Andrew Adams is handling the forfeiture aspects of the case.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.