Pair found guilty of securities fraud, wire fraud, money laundering and failing to file tax returns
Los Angeles – LawFuel – A former Santa Barbara man and his co-defendant were found guilty yesterday afternoon of securities fraud, wire fraud, money laundering and failing to file tax returns after a trial by jury in United States District Court in Los Angeles. Their conviction on the aforementioned charges related to their scheme to defraud investors in an offshore bank. The trial was the second for the defendants after their original conviction, obtained in 2006 on the same charges, was overturned on appeal and remanded to a new judge.
Taansen Fairmont Sumeru, 53, of Lakewood, Washington, also known as David Freeston, and his co-defendant, Jeru Hall, 58, also known as Jerome Harold Hall, of Fairfield, Ohio, were convicted for charges contained in a twenty count indictment charging both Sumeru and Hall with eight counts of securities fraud and nine counts of wire fraud. Additionally, Sumeru was charged in the indictment with two counts of failure to file income tax returns and one count of money laundering conspiracy.
Sumeru and Hall operated Sattva Investment, Ltd., also known as Sattva Investment Bank, Ltd., an offshore investment bank incorporated and licensed in St. George’s, Grenada, West Indies, during 1999 and 2000. Through Sattva Investment, Ltd., Sumeru and Hall promoted and sold investment banking products, including certificates of deposit with purported interest rates as high as 200% per year.
According to court papers, Sumeru purported to be a co-founder, director, and president of Sattva Investment Bank, and his co-defendant, Hall, purported to be a cofounder and director of Sattva, which maintained “consulting offices” in Santa Barbara. In order to lend the appearance of legitimacy to the scheme, and to avoid detection, Sattva used funds received from new investors to make promised payments to earlier investors. In total, more than 100 investors sent over $5 million to Sattva in 1999 and 2000. Further, as a part of their scheme, Sumeru, Hall, and their co-schemers diverted a portion of the funds obtained from Sattva investors to their own personal use.
In addition to the charges specified above, Sumeru was convicted of willfully failing to file federal income tax returns for the 1999 and 2000 tax years. According to the indictment, Sumeru had gross income of $154,095 in 1999 and $95,010 in 2000 which he did not report to the Internal Revenue Service. According to court filings, Sumeru knew that he was required to file an income tax return reporting the income that he received in 1999 and 2000, yet failed to do so. Additionally, these filings alleged that Sumeru was a vocal opponent of the federal tax laws.
When sentenced later this year, Sumeru faces a statutory maximum 107 years in federal prison, fines, and restitution. Sumeru has been in custody since his original arrest in March, 2005. Separately, Hall faces a statutory maximum 85 years in federal prison, fines, and restitution. United States district Judge S. James Otero ordered both Sumeru and Hall to appear for sentencing on December 8 2008. At the end of the proceedings, Judge Otero remanded Hall to the custody of the United States Marshal’s Service.
The investigation of Sumeru and Hall was conducted by IRS – Criminal Investigation and the Federal Bureau of Investigation in Los Angeles. The prosecution was handled by attorneys from the Fraud Section, Criminal Division, United States Department of Justice,