Jury Finds Defendant Guilty In $11.25 Million Investor Fraud Scheme
SACRAMENTO, Calif. — A federal jury found Troy Stratos, 49, formerly of Los Angeles, guilty today of four counts of wire fraud and two counts of money laundering, in a scheme to defraud, United States Attorney Benjamin B. Wagner announced.
According to evidence presented at trial, beginning in December 2010 and continuing through February 2012, Stratos engaged in a scheme to defraud a financial manager in Pennsylvania of approximately $11,250,000. Tim Burns was in the market to buy Facebook stock, pre-IPO (initial public offering), for some of his clients in 2011. Stratos, who used the alias “Ken Dennis,” because his own name had numerous negative postings on the Internet, told Burns that he represented Carlos Slim, one of the wealthiest individuals in the world. Stratos claimed that Carlos Slim was in the process of purchasing a large block of Facebook shares, and Stratos offered to sell to Burns favorably priced Facebook shares that were in excess of what Carlos Slim was purchasing. Stratos also claimed to be connected with insiders at Facebook, including Mark Zuckerberg, and Facebook’s CFO. Stratos promised increasingly larger amounts of Facebook stock starting at approximately two million shares and up to 40 million shares. Based on the representations by Stratos, Burns sent three wire transfers totaling $11,250,000 to purchase the Facebook stock. The first wire transfer was sent to the client-trust account at Venable LLP, which was the law firm that Stratos had retained. The subsequent wire transfers were sent to bank accounts that Stratos controlled.
Throughout the scheme, Stratos assured Burns that the deal would close at any moment, often promising that the “papers” were about to be signed. Alternatively, Stratos offered to refund to Burns his deposit, even within a few days, but warned Burns that he would regret missing the opportunity to make money.
On December 20, 2011, the Federal Bureau of Investigation arrested Stratos in Los Angeles for a separate fraud scheme. Stratos, through text messages and a telephone call, continued to tell Burns that the deal was real and that he could refund Burns’s money. By this time, Stratos had spent nearly all of the $11.25 million.
The maximum statutory penalty for mail and wire fraud is 20 years in prison and a fine of up to twice the gain or loss from the fraud. The maximum statutory penalty for money laundering is 10 years in prison and a $10,000 fine or twice the value of the criminally derived property. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Stratos is scheduled for trial for a separate scheme on October 5, 2015. According to the charges relating to the separate scheme, Stratos allegedly defrauded a woman of at least $7 million by convincing her that he would manage the proceeds of her divorce by investing them overseas where they would earn a high rate of return. These remaining charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
This case is the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorneys Todd Pickles and Jared Dolan are prosecuting the case.