Four Ohio men convicted of defrauding 500 investors out of $10 million
Four Ohio men were convicted for conspiring to defraud investors out of more than $10 million by selling unregistered securities and making several misrepresentations to investors about the product they purported to develop, law enforcement officials said.
Kenneth Jackson, 59, of Glenmont; William Schureck, 81, of Lexington; Dennis Deciancio, 73, of Macedonia, and Daryl Dane Donohue, 67, of Mansfield, were convicted by a jury following a four-week trial. They are scheduled to be sentenced on Sept. 1.
The men were convicted on counts including conspiracy to commit mail and wire fraud, conspiracy to launder money, mail fraud, wire fraud, money laundering, making false statements and other charges.
“More than 500 people were scammed out of money by this group,” said Acting U.S. Attorney Carole S. Rendon. “Retirements were stolen and dreams were destroyed by their fraudulent conduct.”
“These four individuals conspired to misrepresent a product to their investors in order to make a profit,” said Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland office. “The FBI will continue efforts to bring to justice those that have duped investors out of their hard-earned money.”
"These defendants built a house of cards laced with a web of financial lies. Well, the underlying structure fell apart and exposed these individuals for who they really are, thieves," said Kathy A. Enstrom, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. "Combining the financial investigative expertise of the IRS with the skills and resources of the FBI, the Food and Drug Administration and the U.S. Attorney's Office makes a formidable team for combating major, greed-driven crimes."
All four men were affiliated with Medical Safety Solutions, or MSS, a company Jackson founded in 2007 which operated out of Mansfield and had a purported “research and development center” at Jackson’s home in Glenmont. Jackson held the title of Director of Research and Development at MSS. Schureck co-founded the company held the title of Chief Executive Officer at MSS. Deciancio co-founded the company and attended trade shows on the company’s behalf. Donohue was a longtime associate of Jackson who communicated with shareholders of MSS and held himself out as an “FDA consultant” hired by the company for the sole purpose of obtaining Food and Drug Administration approval for the Sharps Terminator, according to trial testimony.
The founders of MSS held the company out as an entity created to develop, market and sell a hypodermic needle destruction device they called the Sharps Terminator. The Sharps Terminator required premarket approval from the FDA before it could be sold in the United States. Jackson and Schureck filed a provisional application for a patent on the Sharps Terminator around April 2007 but did not file an actual patent application until September 2011. MSS filed a premarket approval application for the Sharps Terminator in October 2012. Between 2007 and May 2013, the defendants were engaged in the unregistered sale of securities. They did this by seeking out individuals to buy private shares of stock in MSS, but those shares were not registered with the Securities and Exchange Commission, according to trial testimony.
They defrauded investors by inducing them to buy stock and making false and fraudulent misrepresentations about MSS and the Sharps Terminator, including: that MSS had submitted a premarket approval application when it had not; that FDA approval of the Sharps Terminator was forthcoming or imminent when MSS had not even initiated the approval process; that the FDA had approved the Sharps Terminator when it had not; that the product was “market ready” that was ready for mass production when it was not, and other misrepresentations, according to trial testimony.
To make MSS appear functional and the Sharps Terminator market ready, the defendants took current and prospective investors to MSS’s “R&D facility” and showed them parts, a small number of assembled Sharps Terminator units, and large numbers of Sharps Terminator boxes, many of which were really empty, according to the indictment.
More than 500 investors were defrauded as part of the scheme. They lost more than $10 million between 2007 and 2013, according to trial testimony and court documents.
Jackson and Schureck transferred the money to cover other expenses, and Jackson gambled more than $3.3 million at Mountaineer Casino between 2009 and 2013, according to the court documents.
This case is being prosecuted by Assistant U.S. Attorneys Rebecca Lutzko and Adam Hollingsworth following an investigation by the Federal Bureau of Investigation, the Internal Revenue Service—Criminal Investigations and the Food and Drug Administration.