United States Attorney
Eastern District of New York
January 26, 2011
Two Indicted in Multi-Million Dollar Advance Fee and Alaskan Gold Mine Investment Schemes
BROOKLYN, N.Y. – A three-count indictment was unsealed earlier today in federal court in Brooklyn charging William C. Lange, the president of Harbor Funding Group Inc. (HFGI), and Joseph G. Pascua, the president of Black Sand Mine Inc. (BSMI), with conspiracy to commit securities and wire fraud. The defendants’ initial appearances and arraignments are scheduled to take place this afternoon before U.S. Magistrate Judge J. Richard Creatura. The case has been assigned to U.S. District Judge Dora L. Irizarry in the Eastern District of New York.
The indictment was announced by Loretta E. Lynch, U.S. Attorney for the Eastern District of New York; Ron Verrocchio, Inspector-in-Charge, New York Division, U.S. Postal Inspection Service; and Laura M. Laughlin, Special Agent-in-Charge, FBI, Seattle Field Office.
As alleged in the indictment, Lange and Pascua executed an advance fee scheme by telling land developers, who had clients seeking to build houses in regions affected by Hurricane Katrina, that HFGI had funds available to provide financing for the developers’ projects in exchange for an advance fee of 10 percent of the loan amount. Contrary to their representations, Lange and Pascua did not have the money to finance the loans, but nonetheless kept the 10 percent fee. Through this fraudulent scheme, the defendants allegedly stole more than $9 million.
The indictment also alleges that Lange and Pascua executed a scheme to induce investors to invest in BSMI, which purportedly owned a large stake in a mining operation that was starting to mine gold and other precious metals on Sitkinak Island, Alaska. Through the use of in-person presentations and “webinars,” the defendants allegedly persuaded their victims to invest thousands of dollars in BSMI by fraudulent representations concerning the projected profitability of the gold mine, Pascua’s professional credentials, the intended use of investor funds, and by concealing their prior involvement in HFGI.
“The defendants in this case are charged with executing two bold schemes to defraud their clients and investors of millions of dollars,” stated U.S. Attorney Lynch. “Those who engage in such schemes are on notice that we will use all available resources to protect investors from fraud.” Ms. Lynch extended her grateful appreciation to the U.S. Attorney’s Office for the Western District of Washington for their assistance in the case.
Postal Inspector-in-Charge Verrocchio stated, “As the U.S. Attorney has stated, we in the law enforcement community will identify those individuals who enrich themselves by defrauding others.”
FBI Special Agent-in-Charge Laughlin stated, “This case serves as another warning to the public to be wary of investment campaigns that represent profit opportunities that appear too good to be true. In these very challenging economic times it is crucial for investors to obtain detailed information about investments and to confirm the credentials of those making such representations.”
If convicted, the maximum term of imprisonment for each count of securities fraud and wire fraud is 20 years.
The government’s case is being prosecuted by Assistant U.S. Attorneys Winston M. Paes and Karen Hennigan.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.