Dallas Lawyer Pleads Guilty To Criminal Copyright Infringement Related To Investor Fraud Case Involving Dynasty Spirits, Inc.
DALLAS — Andrew Lee Siegel, a Dallas attorney, appeared this morning before U.S. Magistrate Judge Paul D. Stickney and pleaded guilty to an information charging one count of felony criminal infringement of a copyright, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
According to documents filed in the case, Siegel, 54, admitted committing the criminal infringement by unlawfully reproducing the writings, letterhead and logos of The Northern Trust Company and the Federal Reserve Bank in several fraudulent and fictitious communications with the intent to deceive the owners of Dynasty Spirits, Inc.
In fall 2010, Siegel established Dynasty Spirits, LLC, and later Dynasty Spirits, Inc. and Speak Easy Distillers, LLC, to facilitate the production and bottling of “Nue Vodka.” In February 2012, Siegel created a private placement memorandum for Dynasty Spirits, Inc. (Dynasty) authorizing the sale of up to $2,000,000 of common stock shares by Dynasty.
From September 2011 through July 2012, Siegel collected approximately $1,595,000 from 35 investors for the sale of Dynasty stock certificates. Siegel concealed from Dynasty owners that he unlawfully used up to $410,000 of that amount for his personal benefit, which he had collected from no more than six of the 35 investors.
For example, on April 11, 2012, Siegel unlawfully used $175,000 previously tendered to Dynasty in order to issue himself 700,000 shares of Dynasty stock on June 15, 2012. As part of a civil settlement in June 2013, Siegel agreed to release and surrender any claim to the 700,000 shares.
In November 2012, Dynasty owners suspected Siegel had unlawfully used investor funds, and when confronted, Siegel falsely stated that he had attempted to wire $185,000 in investor funds to Dynasty but the transfer was misrouted. The following month, Siegel created fraudulent and fictitious emails to Dynasty owners representing he attempted to wire transfer $185,000 from his bank account to the Dynasty owners’ bank account. Some of the fraudulent emails Siegel created contained copyrighted writings and the logo of The Northern Trust Company.
Later that month, Siegel created another fraudulent email to Dynasty owners that contained copyrighted writings, letterhead and logos of the Federal Reserve Bank Services. In fact, Siegel used several fraudulent and fictitious emails that falsely represented to Dynasty owners that he was in contact with The Northern Trust Company and the Federal Reserve Bank Services in connection with his “attempted” $185,000 wire transfer to the Dynasty owners. Siegel engaged in this fraudulent conduct to deceive the owners of Dynasty and convince them that he was making a good faith effort to transfer investor funds to the investors of Dynasty.
In June 2013, Siegel and Dynasty reached a civil settlement in connection with various civil claims and counterclaims arising from Siegel and Dynasty’s business relationship. That settlement was before the commencement of the federal investigation, but only after Dynasty discovered and confronted Siegel about his unlawful use of investor funds.
Siegel faces a maximum statutory penalty of five years in federal prison and a $250,000 fine. He will remain on bond pending sentencing set for October 29, 2014.
The FBI is investigating, and Assistant U.S. Attorney David L. Jarvis is in charge of the prosecution.