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19 January 2005 – LAWFUEL – The Law News Network – Bringing the total …

19 January 2005 – LAWFUEL – The Law News Network – Bringing the total number of defendants in the case to seven, federal prosecutors
have charged four more individuals for their roles in the $45 million DFJ Italia
Ponzi scheme that duped investors with promises of high-yield returns and stories
of a royal Italian family with “political and diplomatic immunity in the United
States.”

From late 1996 until the Ponzi scheme collapsed in March 2000, DFJ and its sales
force promised investors annual returns of 24 percent. DFJ operated on the bogus
premise it was headed by a descendant of a royal Italian family that had a treaty
with the United States that gave the company and its “knighted” members immunity
from paying taxes. DFJ, which claimed a 700-year legacy, opened an Orange County
office in 1997. As part of its claims to investors, DFJ said it had interests in
hundreds of companies around the globe and controlled $60 billion that it used as
collateral in “bridge gap” financing programs.

In fact, DFJ was a sham company that did not make promised investments and lulled
investors with bogus account statements showing incredible profits. The majority of
money solicited from investors went to the CEO of DFJ, a man known as “the Don.”

The four defendants were charged late Friday in United States District Court in Los
Angeles and in Santa Ana. All four have agreed to plead guilty to various charges
related to the DFJ scheme. The defendants are:
* Kenneth Kuczwaj, 46, of Temecula, the vice president in charge of the sales staff
at DFJ who also held the title of “Capo di Asta,” or chief of staff. Kuczwaj was
charged with conspiracy to commit mail and wire fraud, two counts of making false
statements to the Securities and Exchange Commission and tax evasion.
* Timothy G. Manno, 36, of Newport Beach, a DFJ salesman who was charged with
conspiracy to commit mail fraud and tax evasion.
* John Reardon, 40, of Commack, New York, who was the chief financial officer at
DFJ. Reardon was charged with one count of willful failure to file a tax return and
failing to report $89,000 he earned at DFJ in 1999.
* John Loy, 42, of Costa Mesa, who also held the title of chief financial officer.
Loy was charged with failing to supply information to the Internal Revenue Service
by understating his DFJ income on his 1998 tax return.
* All four defendants will be summoned to appear for arraignments in United States
District Court in the coming weeks.
* As part of the scheme, Kuczwaj and Manno, along with another DFJ defendant – Guy
Scarpelli, 44, of Neptune, New Jersey – sold investments into DFJ after they learned
that DFJ was a sham. Kuczwaj, Manno and Scarpelli also opened bank accounts in the
names of fictitious businesses which were used to pay “investor returns.” Moreover,
in order to maintain and increase the investors’ confidence in DFJ, throughout the
summer and fall of 1999, Kuczwaj and Scarpelli would tell investors that DFJ owned
an insurance company which would sell the investor an insurance policy which would
guarantee that the investment was safe. In fact, the purported insurance company
was fictitious.
* Scarpelli and the two remaining defendants in the DFJ case – Richard Glenn
Dunham, 57, of Corona Del Mar, and Stephen A. Ceparano, 64, a certified public
accountant from Northport, New York – pleaded guilty last year and are scheduled to
be sentenced later this year.
* The seven cases filed so far in DFJ Italia investigation are the result of an
ongoing investigation by the Federal Bureau of Investigation and IRS-Criminal
Investigation Division.

British MP George Galloway and his opponent the Daily Telegraph will leave no stone unturned to sort out what could be a spectacular libel case.