Sunday, July 17, 2016
Posted: Tuesday, July 5, 2016 1:18 pm
A Wayzata man could be facing up to 20 years in prison for his alleged role in defrauding investors.
According to a release from the United States Attorney’s Office, Southern District of New York, Gerald Seppala, 47, of Wayzata, is charged with one count of conspiring to commit wire fraud and one count of wire fraud.
Seppala and co-conspirators James David Williams and Steven Brown, both of southern California, allegedly defrauded victims out of more than $12 million as part of an advance-fee scheme in which victims were asked to invest in film projects.
“With lies about making feature-length films and documentaries, the defendants allegedly defrauded victims into investing over $12 million with them,” said Manhattan U.S. Attorney Preet Bharara who, with Diego Rodriguez, the Assistant Director-in-Charge of the New York FBI Office, announced the charges on Tuesday, June 28. “Rather than making movies, the defendants perpetrated an advance fee scheme, allegedly using the investors’ money to pay themselves and pay other investors back,” Bharara said.
According to an indictment unsealed in Manhattan federal court, from at least 2012 through June of this year, Williams, Brown and Seppala portrayed themselves as experts in the marketing of feature-length films and documentaries and solicited investments by typically promising guaranteed returns and participation in profits, which never materialized.
In order to solicit these investments, the three made misrepresentations about, among other things, their own investments in the films for which they were soliciting money, as well as investments that they claimed to have received from other investors. To support their claims, they frequently sent the victims falsified financial records that reflected investments that had never actually been made.
Williams and Brown told one victim that the entire investment would be guaranteed by a company called Woodlawn Holdings. In support of these claims, Brown sent the victim’s attorney a letter from someone who claimed to be a “managing member” at Woodlawn guaranteeing the investment, while Williams sent what appeared to be a bank statement for the company responsible for producing the movie, showing a balance of more than $3.5 million.
Subsequent investigation, however, revealed that no one with the supposed managing member’s name worked at Woodlawn, nor had representatives at Woodlawn heard of Williams, Brown or Seppala or the movie they claimed to be making. Investigation of the relevant bank account showed only $500,200 in the account at the time that Williams sent the statement showing a balance of more than $3.5 million.
Williams, Brown and Seppala used the money that was received from investors to fund other projects, pay back previously defrauded investors, or pay their personal expenses. Funds from investors were used for, among other things, the purchases of a home and a car for Williams.
Seppala was arrested in Wayzata on Tuesday, June 28, and was presented and arraigned the same day in St. Paul, before United States Magistrate Judge Becky R. Thorson. He was formally charged with one count of conspiring to commit wire fraud and one count of wire fraud.
Williams and Brown were each charged with one count of conspiring to commit wire fraud, one count of wire fraud, and one count of conspiring to commit money laundering.
Conspiring to commit wire fraud and wire fraud each carry a maximum term of 20 years in prison. Conspiring to commit money laundering carries a maximum term of 10 years in prison.