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Press Release

Three Men Arrested For Wire Fraud Scheme Involving Multilevel Marketing Company

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.—Acting U.S. Attorney James P. Kennedy, Jr. announced today that Craig Jerabeck, 56, of Rochester, NY; Jeb Tyler, 44, of Penfield, NY; and Jason Guck, 42, of Victor, NY, were arrested and charged by criminal complaint with wire fraud and conspiracy. The charges are punishable by up to 20 years in prison and a fine of $250,000. 
Assistant U.S. Attorney Craig R. Gestring, who is handling the case, stated that according to the complaint, from at least 2001 to 2015, Jerabeck was the co-founder, President and Chief Executive Officer of 5LINX, a Rochester based multilevel marketing company. From at least 2001 to the present, Guck and Tyler were co-founders and Vice Presidents of 5LINX. In June 2006, 5LINX entered into a purchase agreement and a stockholder’s agreement with two investment companies. As a condition of the purchase agreement, the investors, 5LINX and the defendants entered into a stockholder’s agreement, which defined certain conditions, rights, and obligations. Among other conditions, the defendants compensation was limited, and any bonus payments required approval by the Board of Directors.
Jerabeck, Tyler, and Guck engaged in a scheme to defraud investors by causing millions of dollars to be diverted from 5LINX into their own personal bank accounts or onto their debit cards without the knowledge or approval of the investors. Beginning in approximately 2009, and continuing until at least May 15, 2015, without the knowledge, permission, or authorization of investors, the defendants created and inserted fraudulent contracted representatives into the 5LINX direct sales team in order to make additional income in excess of their compensation plan. To execute the scheme, the defendants set-up fraudulent 5LINX independent contractor accounts under multiple company names which were actually controlled by the defendants individually or together. Those shell companies were utilized in order to conceal the real owner’s information from employees and the investors.

During times relevant to the conspiracy, Jerabeck, Tyler, and Guck failed to disclose to the investors that they were independent contractors of 5LINX and that they were covertly receiving millions of dollars in additional compensation without the investors’ knowledge or permission. This resulted in inaccurate corporate financial documents being issued which significantly understated the company’s available cash. Those inaccurate statements were then relied upon by the investors in making financial decisions related to their investment in 5Linx. As a result, investors lost as much as $4,000,000.
The criminal complaint is the culmination of an investigation by Special Agents of the Federal Bureau of Investigations, under the direction of Special Agent-in-Charge Adam S. Cohen.

The defendants made initial appearances this morning before U.S. Magistrate Judge Jonathan W. Feldman and were released on conditions. Jerabeck, Tyler, and Guck are due back in court for a status hearing on May 5, 2017 at 9:30 a.m.

The fact that a defendant has been charged with a crime is merely an accusation and the defendants are presumed innocent until and unless proven guilty.

Updated March 24, 2017