Jason George Rivera, Jr., 35, and Marc Christopher Harmon, 41, both of the East Bay, California, have been indicted and charged with eight counts of conspiracy and wire fraud for allegedly promising investors that their money would be used to fund efforts to purchase or trade collateralized mortgage obligations, fund short-term loans to banks, or invest in other ways.
Rivera was also charged with two counts of tax evasion.
Rivera and Harmon were indicted by a federal grand jury on July 3, 2014, which was recently unsealed.
According to the Indictment, Rivera and Harmon offered investors the opportunity to invest in an entity known as Executive Members Management Group (EMMG).
Through EMMG, Rivera and Harmon allegedly promised investors that their money would be used to fund efforts to purchase or trade collateralized mortgage obligations (CMOs), fund short-term loans to banks, or invest in other ways. Rivera also allegedly solicited loans from an investor, promising as collateral for the loans vehicles he either did not own or that he owned but then sold, and fraudulently obtained control of a CMO from other investors.
The Indictment alleges that, based upon these and other representations, investors and lenders directed over $3 million to the EMMG bank account. However, Rivera and Harmon did not make the investments that they had promised, and instead diverted the majority of this money for use on personal expenses and on paying back prior investors. The Indictment further alleges that, in the tax years 2008 and 2009, Rivera evaded paying income taxes on the investor money he used for personal expenses.
Rivera and Harmon were arrested and made their initial appearances in federal court in San Francisco. Bail was set at $150,000 and both defendants were released. Rivera and Harmon’s next court appearance is in San Francisco on July 11, 2014, at 9:30 a.m., before the Honorable Maria-Elena James, United States Magistrate Court Judge, for appointment of counsel.
The maximum statutory penalty for each count of wire fraud and conspiracy, in violation of Title 18, United States Code, Sections 1343 and 1349, respectively, is 20 years’ imprisonment and a fine of $250,000 or twice the gross gain or loss from the offense, plus restitution. The statutory penalty for each count of tax evasion, in violation of Title 26, United States Code, Section 7201, is five years’ imprisonment and a fine of $250,000 or twice the gross gain or loss from the offense. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
U.S. Attorney Melinda Haag, FBI Special Agent in Charge David J. Johnson and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez, announced the charges.
Benjamin Kingsley is the Assistant U.S. Attorney who is prosecuting the case, with the assistance of Bridget Kilkenny. The prosecution is the result of a joint investigation by the FBI, the IRS – Criminal Investigation and the Securities and Exchange Commission.