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Press Release

Former 5linx Owner Pleads Guilty To Wire Fraud And Tax Charge For His Role In Multi-Million Dollar Marketing Scheme

For Immediate Release
U.S. Attorney's Office, Western District of New York

CONTACT:  Barbara Burns
PHONE:      (716) 843-5817
FAX #:         (716) 551-3051

ROCHESTER, N.Y. - U.S. Attorney James P. Kennedy, Jr. announced today that Craig Jerabeck, 57, of Rochester, NY pleaded guilty to conspiracy to commit wire fraud and filing a false tax return before U.S. District Judge David G. Larimer. The charges carry a maximum penalty of 20 years in prison and a fine of $250,000.

Assistant U.S. Attorneys Richard A. Resnick and Craig R. Gestring who are handling the prosecution of the case, stated that in 2001, the defendant, along with co-defendants Jeb Tyler and Jason Guck, started 5LINX Enterprise, Inc. (5LINX), a multi-level marketing company headquartered in Rochester. The company offered utility and telecommunications services, health insurance, nutritional supplements, and business services. 5LINX utilized independent representatives to sell products and services, and to recruit additional representatives. Jerabeck was President and Chief Executive Officer, Guck was Vice President and Secretary, and Tyler was also a Vice President. In June 2006 and July 2006, Jerabeck, Tyler and Guck sold 5LINX stock for $5,500,000 to three investment companies, Trillium Lakefront Partners III, L.P.; Trillium Lakefront Partners III, NY L.P.; and Shalam Investment Co., L.L.C. (collectively known as "the Investors").

Between May 2010 and April 2016, 5LINX sold and distributed products for a Florida vendor. As part of his plea agreement, Jarabeck admitted that he, together with Guck and Tyler, personally, and by companies they owned, received approximately $2,310,510 from a Florida vendor, without the knowledge of the 5LINX’s Investors, Board of Directors, or other stockholders. Jerabeck further admitted that he, Guck, and Tyler were each prohibited from receiving such money by their Stockholders Agreements. 5LINX, its investors, as owners between 2006 and January 2014, and as creditors thereafter, and stockholders, were entitled to and should have received the funds instead of Jerabeck, Guck, and Tyler.

In addition, Jerabeck provided false information on his personal tax returns for the years 2011 through 2013, and 2015. The defendant failed to report income he received from 5LINX, and took deductions to which he was not entitled, that is, commissions that were not paid.  The false returns resulted in a tax loss to the Internal Revenue Service of approximately $118,628.

As part of his plea, Jerabeck has agreed to forfeit his interest in real property at 90 East Lake Road, in Middlesex, NY.

“For many years, this defendant consistently lied to vendors, creditors, and stockholders, as he systematically lined his pockets with millions of dollars meant for those who invested in his company,” stated U.S. Attorney Kennedy. “In addition, the defendant lied to the Internal Revenue Service and defrauded American taxpayers by failing to pay tens of thousands of dollars owed in taxes. Today’s plea should serve as a reminder to those who seek to enrich themselves through acts of dishonesty and fraud that their gains will be short-lived. This Office, together with our law enforcement partners, will work tirelessly to ensure that the final return paid to those who engage in financial fraud will be justice in the form of a federal prison sentence.” 

The defendants were charged in a superseding indictment in September 2017. Charges are pending against Jeb Tyler and Jason Guck. The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.  

The plea is the culmination of an investigation by Special Agents of the Federal Bureau of Investigations, under the direction of Acting Special Agent-in-Charge Kevin P. Lyons, and the Internal Revenue Service, Criminal Investigation Division, under the direction of James D. Robnett, Special Agent in Charge, New York Field Office.

Sentencing will be scheduled at a later date before Judge Larimer.

Updated May 1, 2018