28 May – LAWFUEL – The Law News Network – The United States Attorney…

28 May – LAWFUEL – The Law News Network – The United States Attorney’s Office announced that a federal grand jury in San Francisco indicted Frank J. Garza, Jr., with 14 counts of money laundering and wire fraud. He was indicted in connection with an alleged scheme in which he took investors’ money and used it for purposes other than what he represented. The indictment was returned on April 27, 2005, and unsealed yesterday.

According to the indictment, Garza, 42, formerly of Richmond, California, owned Garza & Associates, a tax and bookkeeping service located in Emeryville, California. Allegedly, between July 1999 and November 2001, Garza offered purported “rare investment opportunities” through a “friends and family” program in order to secure investments in a company named Aerie Networks. Garza then allegedly used entities that he controlled to conceal his use of those funds for purposes unrelated to Aerie. In the course of the alleged scheme, Garza transferred over $1 million to real estate investments that the investors were not told about and did not know about.

U.S. Attorney Kevin V. Ryan said, “Several of the alleged victims trusted Mr. Garza with much of their life savings. Financial advisors have a responsibility to their clients to act truthfully and to treat investors’ funds appropriately.”

IRS Special Agent in Charge, Roger Wirth said, “Money laundering is not a victimless crime. Innocent people were allegedly “duped” by this investment fraud scheme.”

According to the indictment, Garza falsely called himself the “stealth founder” of Aerie, and misused the funds of his college basketball coach. When a married couple called Aerie’s CEO to discuss their investment, they received an angry email from Garza scolding them about violating his trust, telling them not to contact Aerie, and threatening to return their money and not invest it in Aerie.

Mr. Garza is scheduled to make his initial appearance in federal court in Oakland on June 3, 2005, before Magistrate Judge Wayne D. Brazil.

The maximum statutory penalty for each count of money laundering in violation of 18 U.S.C. § 1956 is 20 years in prison and a $500,000 fine. The maximum statutory penalty for each count of wire fraud, in violation of 18 U.S.C. § 1343, is 20 years in prison and a fine of $250,000. However, any sentence following conviction would be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. An indictment only contains allegations against an individual and, as with all defendants, Mr. Garza must be presumed innocent unless and until convicted.

The prosecution is the result of a three and a half year investigation by the IRS and the FBI. David Denier is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Kathy Tat.

A copy of this press release and related court filings may be found on the U.S. Attorney’s Office’s website at www.usdoj.gov/usao/can . Related court documents and information may be found on the U.S. District Court website at www.cand.uscourts.gov or on .

All press inquiries to the U.S. Attorney’s Office should be directed to Luke Macaulay at (415) 436-6757 or by email at [email protected] .

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