February 17, 2010 - Jeffrey H. Sloman, United States Attorney for the Southern District of Florida, and John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (“FBI”), Miami Field Office, announced that on Friday, February 13, 2010, defendants Jimmy L. Barker, Jr., Robert Ladrach, Marc Rifkin, Theodore Ginocchio, Ronald Bowsky, Jack Maddock, Robert Pozsony, Rodger Brownson, and Michael Weidgans were sentenced in connection with a scheme that defrauded more than 669 investors throughout the United States.
From 1998 through 2008, 3001 AD, LLC (“3001 AD”) and its affiliates operated as a virtual reality video gaming company that developed, marketed, and sold high-tech video game products. Initially, 3001 AD and its affiliates operated “Beta Zones,” which were virtual reality video game centers installed in popular theme parks. In 2004, 3001 AD and its affiliates began touting the Trimersion First Person Shooter Video Game Accessary as an in-home accessory that allowed players to immerse themselves in video games played on common, commercially available video game consoles.
According to statements made in open court and documents filed with the court, the defendants raised approximately $19.6 million from investors by selling equity interests in 3001 AD, Trimersion, and numerous affiliated entities with similar names. The defendants attracted investors by making false representations that gave the investing public an unrealistic expectation of high profits. In fact, many investors were promised $29,000 profit annually on each $5,000 invested. To bolster these claims, investors were falsely led to believe that prominent entrepreneurs and well-known companies were considering making significant investments in 3001 AD, and its affiliates. In truth, the Beta Zones that were operated never generated sufficient profits to distribute returns to investors, only approximately 2,000 Trimersion headsets were ever delivered to 3001 AD and its affiliates, and very few Trimersion headsets were ever sold.
Instead of using the investor money to develop and produce virtual reality gaming equipment, the defendants misappropriated investor funds to pay large undisclosed sales commissions and to pay for unauthorized personal expenses.
Sentences imposed by District Judge Paul C. Huck ranged from 152 months’ imprisonment to 30 months’ imprisonment, based in part on the duration and scope of each defendant’s participation in the fraudulent scheme. In addition, each defendant was ordered to pay joint and several restitution to the victims affected by this crime.
U.S. Attorney Jeffrey H. Sloman stated, “The United States Attorney’s Office continues to aggressively prosecute those who participate in investment frauds in the Southern District of Florida. As this case shows, we will investigate and prosecute participants at all levels of these illegal operations, from the fraudulent sales agents to the organizers who mastermind and direct the fraud.”
FBI Special Agent in Charge John V. Gillies stated, “This is a stark reminder that promises of large returns with little risk should immediately send up red flags and make investors run the other way. A strong regulatory and enforcement system is the key to a robust securities market and the FBI and its partners are committed to investigate those who illegally enrich themselves by swindling investors.”
Mr. Sloman commended the investigative efforts of the FBI and the cooperative efforts of the Miami Regional Office of the Securities and Exchange Commission. This matter is being handled by Assistant U.S. Attorneys Ryan Dwight O’Quinn and Oliver Benton Curtis III.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the United States District Court for the Southern District of Florida at www.flsd.uscourts.gov or http://pacer.flsd.uscourts.gov/.
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