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Spouse of Willamette Development Services Executive Indicted for Fraud with Witham Investments

FOR IMMEDIATE RELEASE
April 24, 2012

Eugene, Ore. - Joene Pearl Clyde LaCoste, age 46, the spouse of Joseph Anthony LaCoste, former Chief Executive Officer of Willamette Development Services, LLC (WDS), was arraigned in federal court yesterday. She was added as a defendant to an indictment charging her husband Joseph LaCoste, Angela Marie McCoy, the former Investment Relations Manager for WDS, and the WDS Corporation with securities fraud, mail and wire fraud, and money laundering. The 22 count superseding indictment alleges that she committed these offenses as an executive with Witham Investments, LLC. The indictment also alleges that Joseph LaCoste committed bank fraud and bankruptcy fraud.

The indictment alleges that from April of 2006 through January of 2008, through misrepresentations by Joseph LaCoste and McCoy, WDS obtained $5,285,300 from investors for the ostensible purpose of developing at least ten real estate projects. The indictment also alleges that WDS incurred $10,795,200 of additional indebtedness from lenders. By January of 2008, none of the projects were completed and WDS was insolvent. The investors lost their entire investment. Secured lenders recovered portions of their loans through foreclosure actions.

The indictment alleges that Joseph LaCoste lied about his academic background and prior experience, by failing to tell investors that he had previously been fired from a financial institution for engaging in fraud and that he had previously filed bankruptcy. He and McCoy are also alleged to have told investors that their money would be placed in an Ainvestment holding account@ until certain financial goals were reached, although in almost every project that did not occur. Investors were also told that their money would be used for specific projects, but in fact the funds were allegedly diverted to non-project purposes without investor consent.

The indictment also alleges that between January of 2008 and June of 2010, through Witham Investments, LLC, Joene and Joseph LaCoste caused victims to lose more than 1000 acres of property. According to the indictment, due to misrepresentations by the LaCostes, one couple lost 889 acres and another couple lost more than 200 acres that had been in their family since the 1860s. The indictment also alleges that Joene LaCoste laundered money through Witham Investments and that Joseph LaCoste committed bankruptcy fraud. The indictment alleges that Joseph LaCoste failed to disclose a variety of assets in a bankruptcy petition he filed in February 2009.

Trial of the matter is currently scheduled to occur before U. S. District Judge Michael R. Hogan on June 27, 2012, although the matter has been referred to U. S. Magistrate Judge Thomas M. Coffin for rescheduling of the trial date due to the superseding indictment. On February 8, 2011, former WDS Chief Financial Officer Anthony James Tuomi pled guilty to conspiring with LaCoste and McCoy to commit securities fraud. He is scheduled to be sentenced on August 7, 2012 before U. S. District Judge Michael R. Hogan.

The maximum statutory penalty for securities fraud is 20 years in prison and a $5,000,000 fine, followed by a three year term of supervised release. The maximum statutory penalty for mail fraud and wire fraud is 20 years in prison and a $250,000 fine, followed by a three year term of supervised release. The maximum statutory penalty for bank fraud is a 30 years in prison and $1,000,000 fine, followed by a five year term of supervised release. The maximum statutory penalty for bankruptcy fraud is five years in prison and $250,000 fine, followed by a three year term of supervised release. The maximum statutory penalty for money laundering is 20 years in prison and $500,000 fine, followed by a three year term of supervised release.

A criminal indictment is only an allegation and not evidence of guilt. Defendants are presumed to be innocent unless and until proven guilty.

The case is being investigated by the Federal Bureau of Investigation, the Oregon Division of Finance and Corporate Securities, and the Internal Revenue Service Criminal Investigation Division. The case is being prosecuted by Assistant U. S. Attorney Sean B. Hoar.

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