Defendant Sentenced For Role In Sophisticated International Scheme To Steal Money From American Consumers' Bank Accounts
LAS VEGAS, Nev. – Jason Demko, a Canadian national currently residing in Las Vegas, and Michael Guariglia, of Buffalo Valley, Tennessee, were sentenced today to 46 months in prison and five years of probation, respectively, for defrauding small business owners of nearly 12 million dollars, announced U.S. Attorney Nicholas A. Trutanich for the District of Nevada and Special Agent in Charge Aaron C. Rouse of the FBI.
“Small businesses are an important part of all communities in Nevada and across the country,” said U.S. Attorney Trutanich. “Among other things, they create meaningful jobs, support local neighborhoods, and provide opportunities for entrepreneurs. We appreciate the opportunity to partner with the FBI in bringing these defendants, who targeted small business owners, to justice.”
“The FBI will pursue those who plan, scheme and defraud innocent people for their own personal gain,” said Special Agent in Charge Rouse. “I'd like to thank the men and women of the FBI who work hard every day to identify and apprehend those responsible for taking advantage of trusting citizens; in this case small business owners."
Demko, 43, pleaded guilty on February 14, 2018, and Guariglia, 53, pleaded guilty on March 20, 2018. In addition to the prison term, U.S. District Judge Kent J. Dawson ordered both men to pay restitution (jointly and severally) in the amount of $11,509,087. Demko was also ordered to pay a criminal forfeiture money judgment in the amount of $307,060, and Guariglia was ordered to pay a criminal forfeiture money judgment in the amount of $68,666.
According to court documents, from about December 2009 to February 2014, Demko, Guariglia, their co-defendants, and others operated a telemarketing scam commonly known as the “grant-fee scam” targeting small business owners. In the grant-fee scam, criminals contact small business owners claiming to act as a broker for corporations, charitable foundations, or government agencies looking to give money away. The criminals ask the victims about their businesses, then claim to have found high dollar grants matching the victims’ businesses. For a substantial fee, the criminals offer to file the paperwork needed to obtain the grants, promising that the cost of their services will be covered by the grants the victims will assuredly receive. In reality, no such grants exist. The criminals simply take the victims’ money.
Often, criminals carrying out grant-fee scams then embark on a campaign of “lulling” and “reloading.” Lulling is a series of excuses and distractions designed to make the victims believe that the promised grants are imminent, if only this bit of paperwork or that action were completed. The main purpose of lulling is to delay the victims’ actions to recover the funds and delay the victims’ reports of the crime to law enforcement. Lulling is often done hand-in-hand with reloading, thus scamming more money from victims to pay additional sums for “unanticipated” documents or tax charges to obtain the promised grants. In reality, no such documents or tax charges are needed because no grants exist. Again, the criminals simply take the victims’ money.
Demko, sometimes using the alias Jeff Ross, together with Guariglia, their co-defendants, and others, defrauded hundreds of individuals and families out of nearly 12 million dollars. To carry out their scheme, Demko, Guariglia, their co-defendants, and others made false representations and promises to small business owners to persuade and induce them to pay initial fees, usually between $2,500 and $5,000, for goods and services the victims thought would help them obtain grants for their businesses. The small business owners were told that the total cost for obtaining a grant was between $10,000 and $15,000, depending on the total amount of funding requested, and that the remaining fees would not be charged until the owners received 100 percent of the grant funding. Among other things, Demko, Guariglia, and their co-defendants falsely stated that they had obtained grants for other clients, when in fact they had not done so. The defendants also re-solicited clients for additional fees, including fees for business plans, when they knew that the plans were not going to assist the clients in obtaining any grants. They knew that the true purpose of their solicitations was to obtain funds to personally enrich themselves.
Demko, Guariglia, and their co-defendants operated their scam under JCD Business Services; Foundation Processing Center; Summit Business Consultants, Inc.; Inner Circle Corp., LLC; Sierra Investment Group, Inc.; Valley Business Development; Quid Corp.; Interlan Charitable Foundation; Interlan Financial Corporation; Compass National, LLC; Compass National, Inc.; Direct Business Company, Inc.; Goldcom LLC; and Company Planning LLC.
Co-defendants Lorraine Riddiough (Demko’s mother, a Canadian national residing in Las Vegas who also goes by the name Lorraine Ann Mader) and Lissette Alvarez (a Las Vegas resident) have pleaded guilty. Alvarez was sentenced to three years probation. Riddiough is scheduled to be sentenced by U.S. District Judge Dawson on March 19, 2020.
The U.S. Attorney’s Office and the FBI urge the public to be alert to potential scams. If something sounds too good to be true, it probably is. The Federal Trade Commission posts alerts describing many different types of scams on its website at https://www.consumer.ftc.gov/features/scam-alerts. If you or someone you know has been the victim of a scam, please contact law enforcement without delay.
The case is a result of an investigation by the FBI. Assistant U.S. Attorneys Daniel Cowhig and Kimberly Frayn prosecuted the case.