United States Attorney
Northern District of Illinois
September 24, 2010
Pair Indicted in Investment Fraud Scheme for Allegedly Misusing $12 Million of $30 Million Raised From 70 Investors
CHICAGO — A former suburban Northfield man and a California woman were indicted yesterday for allegedly engaging in an investment fraud scheme, swindling more than $30 million from approximately 70 investors in a purported voice-over-internet telecommunications business they operated. The defendants, Gail Howard and James Jedynak, were each charged with five counts of wire fraud in an indictment returned by a federal grand jury yesterday, Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, and Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation, announced today. Howard and Jedynak allegedly misappropriated more than $12 million of investors’ funds for their own benefit.
Howard, also known as “Betty Gail Howard,” 60, of Canyon Country, Calif., and Jedynak, 45, believed to be living in Texas and formerly of Northfield, will be arraigned at a later date in U.S. District Court. The indictment seeks forfeiture of approximately $27 million.
According to the charges, Howard was president and chief executive officer, and Jedynak was senior vice president and head operations and sales executive, of Unified Worldwide Transport, LLC. (UWT), a Santa Monica, Calif., company that was purportedly in the business of routing voice-over-internet protocol telecommunications traffic. UWT sold equity shares to investors through private placement offerings, and Jedynak was responsible for recruiting individuals and entities, including some from the Chicago area, to invest in the business.
According to the indictment, between 2003 and 2007Howard and Jedynak raised more than $30 million through the fraudulent offer and sale of investment interests and loans to UWT. The defendants allegedly falsely represented that investments and loans would be used to acquire telecommunications routes, build network infrastructure, provide working capital, repay debt, and purchase licenses and equipment. Instead, they misappropriated more than $12 million to purchase luxury goods and services, such as a swimming pool, a boat, jewelry, and plastic surgery, to pay for home improvements, to make payments to friends and relatives, to make personal investments, to purchase real estate, and to fund outside business interests, the charges allege.
As part of the fraud scheme, the defendants falsely represented that UWT had a contract with Peoria-based Caterpillar Corp., which they claimed owed UWT a lot of money, when in fact there was no contract and no money owed, according to the indictment.
Jedynak allegedly falsely represented to investors that he would receive no compensation from UWT until investors received all of their principle back. Howard allegedly told investors that she had a law degree and a master’s degree in business administration and had worked as a state prosecutor in Arkansas, none of which was true, the indictment states.
The government is being represented by Assistant U.S. Attorney Rachel Cannon. The Illinois Department of Securities assisted the investigation conducted by the FBI.
The Financial Fraud Enforcement 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. For more information on the task force, visit: www.StopFraud.gov.
Each count of wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory. The Court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. If convicted, however, the Court would determine a reasonable sentence to impose under the advisory United States Sentencing Guidelines.
An indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.