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March 15, 2002
The United States Attorney's Office for the Northern District of California announced that Joseph M. Palomba, of Oakland, was sentenced today by Judge D. Lowell Jensen, to two years and six months in federal prison for committing mail fraud and for filing a false claim with the Internal Revenue Service. In addition, the Court ordered Mr. Palomba to pay restitution of over $125,000 to victims of his fraud schemes.
According to the plea agreement, Mr. Palomba controlled Aldesa Brokerage Group, Inc., ("Aldesa") a California corporation located at 436 14th Street, Suite 1312, Oakland, California. During 1998, Aldesa placed advertisements in the Classified Flea Market, The Daily Review, Oakland Tribune, Alameda Times, Tri Valley Herald, and the San Mateo County Times falsely claiming that Aldesa provided financial services in Costa Rica and stating it was seeking investors, allegedly to invest in Costa Rican bank certificates of deposit with semi-annual rates of return of 17.50 percent to 20 percent and annual rates of returns of 19.50 percent to 21 percent.
By April, 2000, as a result of the newspaper advertisements and false and misleading letters, Mr. Palomba received more than $150,000 from 12-13 investors in the Northern District of California, purportedly to invest in Costa Rican bank certificates of deposit. Mr. Palomba did not invest any money in Costa Rican bank certificates of deposit. Instead, he used the money for his personal expenses. Investors received fraudulent account statements through the U.S. mail showing their account balances increasing substantially over time, although Mr. Palomba had never invested their money and instead used the money for personal expenses.
Mr. Palomba also filed more than 60 false claims for income tax refunds with the Internal Revenue Service claiming more than $400,000. Mr. Palomba allegedly used, among others, the names and identifying information of prisoners currently incarcerated in California's Penitentiary at Pelican Bay, as well as other prisons in California, Arizona and Arkansas. Fictitious W-2 forms showing inflated withholdings were allegedly used to claim unwarranted refunds. Actual company names appeared on the W-2 forms, but none of the companies has a record of employing the persons named on the W-2 forms.
The Court adopted the United States' recommendation and followed the plea agreement in sentencing Mr. Palomba to 30 months in federal prison. It also ordered him to pay approximately $125,000 in restitution to seven victims in addition to the IRS, which is to receive $6,989. The restitution amounts range from a low of $2,499 to a high of $50,000. Mr. Palomba has been in federal custody since May 11, 2000, and will be given credit for time served.
The investigation was the result of an extensive joint investigation by the United States Postal Service and the Internal Revenue Service. Thomas Moore is the Assistant U.S. Attorney who is prosecuted the case.
A copy of this press release and related court documents may be found on the U.S. Attorney's Office's website at www.usdoj.gov/usao/can.
All press inquiries to the U.S. Attorney's Office should be directed to Assistant U.S. Attorney Matthew J. Jacobs at (415) 436-7181.
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