June 6, 2003

OFFICE OF THE UNITED STATES ATTORNEY
SOUTHERN DISTRICT OF CALIFORNIA
San Diego, California

United States Attorney
Carol C. Lam

For Immediate Release

NEWS RELEASE SUMMARY

United States Attorney Carol C. Lam and Assistant Attorney General Eileen J. O'Connor of the Department of Justice, Tax Division today announced that U.S. District Judge Barry Ted Moskowitz sentenced a promoter of a telemarketing scheme that defrauded over 3,000 victims of almost $50,000,000 to more than 24 years in prison. Marc David Levine was sentenced to 292 months imprisonment, three years supervised release, a $2,200 special penalty assessment and ordered to pay $49,050,378 in restitution to victims.

U.S. Attorney Lam stated, "The sentence was fully justified in light of the magnitude of the fraud," and noted that the sentence imposed should serve as a warning to individuals perpetrating investment fraud schemes upon the public. Assistant Attorney General O'Connor said that the sentence demonstrates that promoters of telemarketing schemes who defraud the public and the United States will be held accountable for their crimes.

Levine, 45, a resident of Woodland Hills, California, was convicted on January 24, 2003 of 24 counts of conspiracy to commit wire fraud, mail fraud, and securities fraud, substantive counts of mail and wire fraud, conspiracy to commit money laundering to promote the fraud and to conceal the proceeds received, substantive money laundering and conspiracy to defraud agencies of the United States, specifically the Securities and Exchange Commission, the Federal Trade Commission and the Department of the Treasury. Levine was the lead defendant in a trial which began on September 3, 2002 and lasted 21 weeks.

According to U.S. Attorney Lam, the charges for which Levine was sentenced arose out of his involvement with a telemarketing organization (described in court papers as "the Enterprise") which was headquartered in Los Angeles, but operated boiler rooms in several U.S. cities, including San Diego, Las Vegas, Nevada, and Tampa, Florida, and defrauded over 3,000 victims nationwide of almost $50,000,000 through its design, development and marketing of a series of "high-tech," telecommunications-related securities (including 900-number, pay-per-call services, virtual shopping malls and Internet service providers in various U.S. cities), which were not registered as required by law and which were fraudulently described to investors as "general partnerships." U.S. Attorney Lam said that this case was indicted on April 27, 2001, by a Federal Grand Jury sitting in San Diego, which charged 20 former members of the same telemarketing organization. Lam said Levine's sentencing, and 30 other convictions secured by guilty pleas and conviction at trial, demonstrate that high technology crime can be effectively prosecuted so long as law enforcement is committed to staying ahead of the criminals by maintaining the necessary technological expertise and combining and coordinating investigative resources.

United States Attorney Lam said that the San Diego Boiler Room Task Force, a telemarketing and Internet fraud investigative team made up of representatives from the United States Attorney's Office, the Department of Justice's Tax and Fraud Divisions, the FBI, the Internal Revenue Service Criminal Investigation Division, the United States Postal Inspection Service, the Federal Trade Commission, the U.S. Securities and Exchange Commission, the California Attorney General's Office, the California Department of Corporations and other federal, state and local agencies in San Diego, had investigated this telemarketing organization for over four years and worked closely with its multi-jurisdictional counterpart in Tampa, the Securities Fraud Task Force, which has as its members the U.S. Attorney's Office, the Tampa field office of the FBI and the Florida Comptroller's Office's Division of Investigations. United States Attorney Lam also acknowledged the United States Attorney for the Middle District of Florida, Paul Ignatius Perez, for his office's aggressive efforts in investigating telemarketing fraud and their assistance in developing the charges which formed the basis of the Indictment in which Levine was charged.

Assistant United States Attorney Steven A. Peak, the lead prosecutor handling the case, said that based on evidence admitted at trial, including the testimony of Levine's long-term partner, Ira Itskowitz, who had previously pleaded guilty, documents filed with the court in related cases, and through admissions made by other cooperating defendants during their guilty pleas, the telemarketing organization of which these defendants and others were members solicited victims to invest monies in "general partnerships," which were actually securities under federal law, through the use of false and fraudulent promises and representations and omissions of material facts. Each fraudulent venture consisted of a partnership which was to be owned by the investors, and a corporation which was to serve as the Initial Managing Partner of the partnership. The Initial Managing Partner corporation, which was controlled by the Enterprise, received a management fee equal to 85% of the funds invested in the partnership, which normally involved several million dollars. The nature and percentage of this management fee was deliberately concealed from investors by means of intentional misrepresentations, lies and omissions.

According to Assistant U.S. Attorney Peak, the twelve fraudulent ventures were divided into three "high tech" categories, each of which involved the raising of millions of dollars. The first category of offerings, Touch Tone One, Touch Tone Two, Bureau Net, Link 900 and Teleserve Partners, were purportedly partnerships engaged in developing a business to offer 900-number, pay-per-call services to the public. The next group of fraudulent partnership offerings consisted of businesses engaged in developing a home shopping mall on the Internet called Future Net Emporium, a home shopping computer market and merchandise outlet on the Internet called Home Net Shopping, and an Internet shopping mall called Central Plaza Mall. The last set of offerings related to the development of companies which would provide Internet access to businesses and individuals in various U.S. cities and which were called I-Net Providers (Atlanta, Houston and Philadelphia), Enternet (Chicago, Detroit and Indianapolis), ConnectKom (Seattle) and Intellicom (New York).

Special Assistant U.S. Attorney Danny N. Roetzel, the Department of Justice Tax Division attorney assigned to the investigation and trial, stated that the evidence at trial demonstrated, as did the earlier admissions by other defendants in their guilty pleas, that the participants in the conspiracy defrauded agencies of the United States by deceitful and dishonest means, including the use of nominee entities in which to receive funds for their benefit. These conspirators used foreign and domestic nominee corporations, attorney client trust accounts, financial accounts of family members, and trusts in which to hide monies from the SEC, FTC and the Department of the Treasury, including the Turks and Caicos Islands, the Cayman Islands, Hong Kong, and the Cook Islands. Special Assistant U.S. Attorney Roetzel said that the evidence at trial also established that Levine and his co-conspirators engaged in money laundering in order to promote the illegal activities of the Enterprise, such as payments made to the boiler room owners, who in turn paid the salespersons, and to conceal the proceeds of their fraud by the use of nominees, attorney client trust accounts, relatives and trusts as well as to avoid the Department of the Treasury's currency reporting requirements. Evidence at trial showed that Levine and others also destroyed some of the books and records of the Enterprise in order to prevent the government agencies from determining the specific monies each defendant had received from the scheme. Levine personally received $1.8 million from the scheme, yet never filed an individual income tax return for those years or paid any income taxes.

Finally, United States Attorney Lam said that the government's case against the fraudulent telemarketing activities of the Enterprise and its members will continue as there are three defendants yet to go to trial and one defendant who faces a retrial. The sentences or sentencing dates of Enterprise members who have pled guilty in related cases, the roles of whom are identified in the Indictment, are outlined below.

SUMMARY OF CHARGES

Marc David Levine

Title 18, U.S.C., Sec. 371 - Conspiracy to Commit Wire Fraud, Mail Fraud, Securities Fraud and Conspiracy to Defraud the United States
Maximum penalty per count: five years; fine of $250,000 (or twice the gain)

Title 18, U.S.C., Sec. 1343 - Wire Fraud
Maximum penalty per count: five years; fine of $250,000 (or twice the gain)

Title 18, U.S.C., Sec. 1341 - Mail Fraud
Maximum penalty per count: five years; fine of $250,000 (or twice the gain)

Title 18, U.S.C., Sec. 1956(h) - Conspiracy to Commit Money Laundering
Maximum penalty per count: twenty years; fine of $500,000 (or twice the involved funds)

Title 18, U.S.C., Sec. 1956(a)(1)(A)(i) - Money Laundering (Promotion)
Maximum penalty per count: twenty years; fine of $500,000 (or twice the involved funds)

AGENCIES

San Diego Boiler Room Task Force
Federal Bureau of Investigation, San Diego Division
Internal Revenue Service, Criminal Investigation Division
United States Postal Inspection Service
Securities Fraud Task Force, Tampa, Florida
Federal Bureau of Investigation, Tampa Division
Florida Comptroller's Office, Division of Investigations
California Department of Corporations

SENTENCING DATES / SENTENCES OF DEFENDANTS
WHO HAVE BEEN CONVICTED OR PLEAD GUILTY IN RELATED CASES

Defendant Name, Sentencing Date, Sentence

Ira Itskowitz, 07/13/01, 71 months in custody
3 years of supervised release
$49,031,740 restitution order
$1,067,339 forfeiture order

Daniel William Rearick, 07/13/01, 60 months in custody
3 years of supervised release
$46,526,740 restitution order
$425,968.50 forfeiture order

Michael Emerson Lopuszynski, 11/20/00, 60 months in custody
3 years of supervised release
$28,254,961 restitution order
$164,750 forfeiture order

Christopher Scott Courtney, 12/18/00, 71 months in custody
3 years of supervised release
$48,400,081 restitution order

David Zeidel Diamand, 02/18/03, 88 months in custody
3 years of supervised release
$6,687,966 restitution order

Michael Wilhelm Engelhardt, 11/17/00, 37 months in custody
3 years of supervised release
$23,351,873 restitution order
$26,999 forfeiture order

Joseph John Widmer, 07/27/01, 46 months in custody
3 years of supervised release
$13,174,227 restitution order

Timothy David Grayson, 08/27/02, 46 months in custody
3 years of supervised release
$30,850,088 restitution order
$343,374 forfeiture order

Kent Bollenbach, 03/05/03, 54 months in custody
3 years of supervised release
$29,075,848 restitution order

Joseph Anthony Marfoglia, 02/13/03, 30 months in custody
3 years of supervised release
$707,228 restitution order

Sylvan Morgan Metoyer, III, 03/12/03, 25 months in custody
3 years of supervised release
$1,030,466 restitution order

James Thomas Rissmiller, 02/19/03, 30 months in custody
3 years of supervised release
$4,841,113.92 restitution order

Anthony Matthew Castriotta, 04/01/03, 37 months in custody
3 years of supervised release
$2,945,148 restitution order

Mark Allen Jaconski, 05/12/03, 21 months in custody
3 years of supervised release
$6,664,776 restitution order

Richard York, 03/04/03, 21 months in custody
3 years of supervised release
$4,293,537.46 restitution order

Dennis S. Goddard, 02/05/01, 24 months in custody
5 years of supervised release
$1,018,312 restitution order

Lawrence Francis Long, Sr., 02/01/02, 27 months in custody
3 years supervised release
$18,200,290 restitution order

Michael Anthony Green, 02/01/01, 12 months in custody
3 years of supervised release
$5,577,990 restitution order

James Charles Quinn Slaton, 03/20/00, 18 months in custody
3 years of supervised release
$4,485,000 restitution order

Mark Victor Nachamkin, 03/20/00, 12 months in custody
3 years of supervised release
$4,974,575 restitution order

Robert Harry Reisner, 09/20/01, 8 months in community confinement
3 years supervised probation
$116,000 forfeiture order
$10,000 fine

Paul Evan Perelman, 03/20/00, 3 years of probation
$1,499,855 restitution order

Lindsay Wellman, 07/13/01, 8 months in community confinement
400 hours of community service
3 years of supervised probation
$95,000 forfeiture order

Gary Mariarossi, 11/12/99, 5 years of probation
$456,995 restitution order

Timothy Caswell Traub, 11/12/99, 5 years of probation
$100,000 restitution order

James D. Coffey, 11/03/99, 3 years of probation
$34,000 restitution order

Michael Joseph Coyne, 12/22/99, 5 years of probation
$70,000 restitution order

Defendants awaiting sentencing:

Eugene Donald Evangelist, Jr. on 6/11/03 at 8:30 a.m.
Brent Douglas Morris on 7/14/03 at 2:00 p.m.
Robert Terrance Hart on 10/23/03 at 8:30 a.m.