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Justice News

Department of Justice
U.S. Attorney’s Office
Western District of New York

FOR IMMEDIATE RELEASE
Wednesday, December 12, 2018

Former 5LINX Owner Sentenced To 14 Months In Prison

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

ROCHESTER, N.Y.- U.S. Attorney James P. Kennedy, Jr. announced today that Jeb Tyler, 45, of Rochester, NY, who was convicted of conspiracy to commit wire fraud and filing a false tax return for the year 2012, was sentenced to serve 14 months in prison by U.S. District Court Judge David G. Larimer. The defendant was also ordered to pay $2,759,633 in restitution. 

Assistant U.S. Attorney Richard A. Resnick, who handled the prosecution, stated that in 2001, the defendant, together with Craig Jerabeck and Jason Guck started 5LINX Enterprise, Inc. (5LINX), a multi-level marketing company headquartered in Rochester, which offered utility and telecommunications services, health insurance, nutritional supplements, and business services. 5LINX used 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 the defendant was Vice President.

In June 2006 and July 2006, the defendant, Jerabeck, 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. The defendant, along with Jerabeck and Guck, and without the knowledge of the Investors, Board of Directors, or other stockholders, conspired and agreed to cause the Florida vendor to pay them personally or companies they owned approximately $2,310,510, which their Stockholders Agreements prohibited them from receiving. 5LINX, its investors, as owners between 2006 and January 2014, and as creditors thereafter, and stockholders were entitled to and should have received such funds instead of defendant, Guck, and Tyler.

The Judge at sentencing also referenced that the defendant, Jerabeck and Guck engaged in additional fraudulent conduct by representing themselves as “fictitious representatives” of 5Linx, resulting in them receiving approximately $12,000,000 in fraudulent proceeds.

In addition, the defendant provided material false information on his personal tax returns, Forms 1040, for the years 2011 through 2013, and 2015. Specifically, Tyler 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 of approximately $449,123.

The Judge ordered the forfeiture of the defendant’s interest in real property at 4385 County Road 16 in Canandaigua, NY.

Craig Jerabeck and Jason Guck were previously convicted. Jerabeck was sentenced to 14 months in prison, Guck is awaiting sentencing.
 
Today’s sentencing is the culmination of an investigation by Special Agents of the Federal Bureau of Investigations, under the direction of Special Agent-in-Charge Gary Loeffert, and the Internal Revenue Service, Criminal Investigation Division, under the direction of James D. Robnett, Special Agent in Charge, New York Field Office.

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Topic(s): 
Financial Fraud
Tax
Updated December 12, 2018