Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, announced today that a Superceding Indictment has been filed against Steven G. Barkus and Michael A. Lombardo, charging them with one count of conspiracy, one count of wire fraud, two counts of mail fraud, and one count of securities fraud in connection with a scheme to defraud investors through false material representations and omissions. Barkus and Lombardo were also charged with tax violations, including conspiracy to impede and impair the ability of the Internal Revenue Service to assess their taxes and collect payment on their taxes, evasion of payment to the I.R.S., and tax evasion. According to court records, Barkus and Lombardo both reside in California.

The Superseding Indictment charges that, at the end of 2000, Barkus and Lombardo fraudulently sold securities and solicited investors’ funds by selling interests in various business ventures, including but not limited to Psorsoothe Industries, LLC, aka AuraSoothe Life Healing Sciences, LLC (which purported to sell a remedy for psoriasis), Universal Power and Timber Top, LLC.

Barkus and Lombardo agreed to allow another co-conspirator (previously charged), Steven I. Helfgott, who was then an attorney in Cleveland, Ohio, to be a trustee on their behalf and to be a manager of AuraSoothe Life Healing, LLC, such that Helfgott anticipated that he would participate in and would share in the proceeds of the other offerings/ventures of Barkus and Lombardo in the future. Beginning in February, 2001, Barkus and subsequently Lombardo and co-conspirator Helfgott, agreed to use Helfgott’s IOLTA account to deposit and disburse funds on behalf of Barkus and Lombardo. The Superseding Indictment also charges that, at this time, Barkus and Lombardo had federal tax liens filed against them by the IRS for taxes due and owing in 1993, with these liens reflecting outstanding tax liabilities, including penalties and interest, of over $1,000,000 for each defendant. A tax lien would prevent the defendants from selling, spending or otherwise disposing of any funds or assets which the defendants obtained and controlled for their own benefit or in which the defendants had a legal or beneficial ownership or interest, without first allowing the IRS the opportunity to determine if it could satisfy its tax lien against such funds or property.

The Superseding Indictment charges that Barkus and Lombardo solicited various investors, to include those who provided working capital as well as those who purchased membership interests in the various companies, to invest in, or to provide money for, various investments, often seeking “start up” or “seed” money, various companies and projects for profit which the defendants claimed had some kind of humanitarian purpose as well. In a few instances, Barkus solicited funds because his business partner, Lombardo, was ill or had “fallen on hard times”, or because Barkus said he had an immediate need for funds, usually representing that he would repay the money quickly and at a good rate of return because a return on an investment was coming due very soon to Barkus. In many instances, Barkus made these requests for money of individuals who he befriended, who were members of his church and/or who had trusted him.

The Superseding Indictment also charges Barkus and Lombardo with one count of conspiracy to impede and impair the ability of the I.R.S. to assess and collect their taxes. Barkus is also charged with three counts of evasion of tax due and owing for tax years 2003, 2004, and 2005, while Lombardo is charged with four counts of evasion of tax due and owing for tax years 2003, 2004, 2005 and 2006.

If convicted, the defendants’ sentence will be determined by the Court after review of factors unique to this case, including the defendants’ prior criminal records, if any, the defendants’ role in the offense and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

This case is being prosecuted by Assistant United States Attorneys Robert J. Patton and Christian H. Stickan, following an investigation by the Cleveland Office of the Internal Revenue Service, Criminal Investigation Division, and Postal Inspection Service, with assistance from auditors from the U.S. Attorney’s Office and the I.R.S..

A Superseding Indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.