OHIO
A federal grand jury indicted three men from Northeast Ohio for their roles in a conspiracy to defraud about 70 investors out of about $17 million, law enforcement officials said.
Thomas Abdallah, 51, of Brunswick, Mark M. George, 58, of Independence, and Jeffrey L. Gainer, 51, of Akron, were named in a 12-count indictment, according to authorities.
The defendants used investor money for personal expenditures and luxury items including a Mercedes Benz, a boat and mortgage payments on high-end residential property, officials said.
“This case is another sad reminder that so-called investment gurus who make promises of big guaranteed returns should send up red flags,” Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio, said. “If something seems too good to be true, it usually is.”
“These defendants callously preyed on the desires of many to make wise investments for a secure future and duped them out of their life savings,” Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland Office “Fraudsters such as these remain a top priority of the FBI.”
Kenneth A. Grant, Jerry A. Cicolani and Kelly C. Hood previously pleaded guilty to crimes related to this fraud.
These are the allegations, according to authorities:
- Abdallah and Grant owned and operated KGTA Petroleum, Ltd. They and others marketed KGTA as a company that earned profits from buying and selling crude oil and refined fuel products.
- They represented to investors that they had relationships with third-party purchasers and investor funds would be used to purchase fuel products at a discount and then resold at substantial profit.
- KGTA issued investment agreements and promissory notes which offered guaranteed monthly payments up to five percent per month or annual payments of approximately 60 percent per year.
- The defendants never filed documentation about KGTA with the Securities and Exchange Commission.
The defendants were able to rake in about $31 million from about 70 investors between 2010 and 2014 through false and fraudulent pretenses.
They knew KGTA did not have agreements in place to sell oil and fuel, and that investors would not earn 5 percent per month on their investments, according to the indictment.