Three from Northeast Ohio plead guilty for their roles in $17 million investment fraud
Three men from Northeast Ohio pleaded guilty this week for their roles in a conspiracy to defraud about 70 investors out of approximately $17 million, law enforcement officials said.
Thomas Abdallah, 52, of Brunswick, pleaded guilty this week to plead to one count of conspiracy to commit wire fraud and securities fraud and one count of money laundering.
Mark M. George, 59, of Independence pleaded guilty to one count of conspiracy to commit wire fraud and securities fraud.
Jeffrey L. Gainer, 52, of Akron, pleaded guilty to one count of sale of unregistered securities.
All three are scheduled to be sentenced Oct. 4
The guilty pleas was announced by Carole S. Rendon, U.S. Attorney for the Northern District of Ohio, Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland Office, and Kathy Enstrom, Special Agent in Charge, IRS-Criminal Investigations, Cincinnati Field Office.
Kenneth A. Grant, Jerry A. Cicolani and Kelly C. Hood previously pleaded guilty to crimes related to this fraud.
Abdallah and Grant owned and operated KGTA Petroleum, Ltd. They and others marketed KGTA as a company that earned profits from buying and selling crude oil and refined fuel products. They represented to investors that they had relationships with third-party purchasers and investor funds would be used to purchase fuel products at a discount and then resold at substantial profit, according to court documents.
KGTA issued investment agreements and promissory notes which offered guaranteed monthly payments up to five percent per month or annual payments of approximately 60 percent per year, according to the information. The defendants never filed documentation about KGTA with the Securities and Exchange Commission, according to court documents.
Together, they obtained approximately $31 million from about 70 investors between 2010 and 2014 through false and fraudulent pretenses. They knew KGTA did not have agreements in place to sell oil and fuel, and that investors would not earn 5 percent per month on their investments, according to court documents.
The defendants used investor money for personal expenditures and luxury items including a Mercedes Benz, a boat and mortgage payments on high-end residential property. As a result of the conspiracy, the defendants defrauded the investors out of approximately $17 million, according to court documents.
This case is being prosecuted by Assistant U.S. Attorneys M. Kendra Klump and Mark S. Bennett following an investigation by the Federal Bureau of Investigation and Internal Revenue Service—Criminal Investigations.