IRS Announces Investment Fraud Scheme Promoter Indicted

Los Angeles, California – LAWFUEL – The Legal Newswire – Friday afternoon, Dante Marco Fala, of Canoga Park, made his initial appearance in United States District Court in Los Angeles, pleading not guilty to five counts of tax evasion.

Appearing before United States District Judge Manuel L. Real, Fala entered his not guilty plea to charges that he failed to report over $1,035,000 in income that he received over a five-year period to the Internal Revenue Service. Previously, Fala was indicted on 16 counts of mail fraud relating to his promotion of an investment fraud scheme.

The charges, contained in an indictment returned Thursday, October 11, 2007, specify that Fala owned and operated Harrison Asset Management, Inc., Money Asset Management, Inc., and Cash Asset Management, Inc., Fala’s asset management companies purported to offer investments into distressed debt portfolios. Fala’s operation of these companies allegedly was a part of a scheme he employed to defraud investors. Fala diverted funds from accounts of the asset management companies to other accounts he controlled and then used the money for his own personal purposes. Fala failed to report the income he received from 2000 through 2004 from these companies on his personal income tax returns, resulting in his evading nearly $330,000 in tax.

According to the indictment, Fala caused more than 1,000 victims to send $20 million to his asset management companies from 1999 through 2004. In a scheme to defraud investors, Fala and telemarketers working for him would call victims and offer investments in the debt portfolios they had acquired. As a part of the solicitation of investors, Fala and the telemarketers would claim that they had acquired distressed debt portfolios at deep discounts and that the asset management companies were highly successful, making profits and distributing dividends to investors from these supposed profits. In truth, the asset management companies collected far less on the debt portfolios they acquired than they had spent on their purchase, the companies used victim investors’ money for unauthorized expenses such as excessive and undisclosed commissions, expenditures were made to bring in additional victim funds, and money was used to allow Fala to engage in the day trading of stocks.

If convicted of all counts in the indictment, Fala faces a statutory maximum 345 years in federal prison and fines of $4.5 million or twice the gross gain or gross loss, whichever is greatest. Fala is scheduled to begin trial on the mail fraud charges on October 30. He will be tried on the tax evasion charges at a later date.

The case against Fala was brought by IRS – Criminal Investigation and the Federal Bureau of Investigation.

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