A South Florida lawyer helped pull off a $19.7 million fraud — a pump-and-dump stock scheme involving shell companies.
Now, federal prosecutors thinks James Schneider of Hillsboro Beach is trying to play them in a modern version of an old-fashioned shell game, keeping the government looking in one place while hiding his money in another.
Schneider, 77, was sentenced in Miami federal court to seven years in federal prison on Feb. 15 after his conviction on 33 counts of fraud and money laundering. He has filed a notice of appeal.
By law, he’ll have to serve at least 5 years, 11 months of those seven years. On March 7, the state Supreme Court granted Schneider’s request for disciplinary revocation without the ability to seek re-admission. In practice, that’s the same as disbarment.
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He’ll exit prison an 83-year-old who will owe $19,701,195 million to 2,156 people who invested in shell companies that existed in name only.
Eye-catching as both numbers might be, they represent the fraud from only four shell companies: mLight Tech, later known as CX Network Group; Entertainment Art, which traded later as Biozoom; Intake Communications aka Game Face Gaming and FaceUp Entertainment Group; and Fansport, which also went by Media Analytics Corp. and Jade Global Holdings.
Prosecutors explained in court documents that as far as 16 other companies, they couldn’t “meet [the] burden of establishing a reasonable estimate of loss by a preponderance of the evidence as to each victim.”
The trial and sentencing over, now the lawyers and money cops start looking for financial pounds of flesh. Court documents say prosecutors already snagged $7,260,760 in cash forfeiture.
“This constitutes “ill gotten gains” of this Defendant and his conspirators,” a Justice Department spokesman said in an email to the Miami Herald. “Some funds have been seized from co-conspirators, and these “forfeiture” amounts are expected to be applied to the restitution losses, through a DOJ process called ‘restoration.’ ”
Court documents also say Schneider claimed in a presentencing investigation report that his assets numbered only a joint Citibank checking account with wife Susan Schneider with $3,000 and a 2018 Toyota. Schneider restated that in a Dec. 17 interview with his probation officer.
Prosecutors informed the court that they found a Wells Fargo account in James Schneider’s name that, as of Dec. 31, had a total of $759,072.57 in cash, stocks and fixed rate financial instruments. And that Schneider bought a $50,000 Wells cashier’s check with money from a third account and deposited that into the Citibank joint checking account.
Also, checking and savings accounts in Susan Schneider’s name had $33,658.33 on Dec. 31.
“Other financial documents previously obtained appear to reflect that the source of these funds were accounts that [James Schneider] owned, controlled or had signature authority over,” prosecutors stated in a Feb. 13 filing. “These funds were not disclosed to the probation officer.”
Palm Beach County property records say the Schneiders bought a Woodfield Country Club house in 1988 for $371,300 and sold it for $837,500 in January 2017. They whipped the $774,078.85 profit left after sale expenses into a Morgan Stanley account with only Susan Schneider’s name. Prosecutors noted the sale and money shift was 10 months after James Schnieder was told a Securities and Exchange Commission investigation would likely end with civil fraud charges against him.
His address on file with the Florida Bar is a Hillsboro Beach address of a Palm Hill villa the Schneiders bought jointly for $340,000 and moved into Susan Schneider’s name solely in 2001. Seven years later, Schneider began using his corporate attorney skills for the scheme.
“The government has the ability to attempt to obtain the defendant’s interest in any property, whether that be real or personal (i.e.,money),” the email from the Justice Department spokesman said. “Of course, there is the possibility that litigation regarding these properties may arise (i.e., litigation with the defendant’s wife).”
The government has been sending letters and other methods to get in contact with the 2,156 victims. Those who think they were investors in one of the four aforementioned shell companies should contact the U.S. Attorney’s Office, Victim-Witness Unit, at 305-961-9455.