Florida-Based Former Attorney Pleads Guilty to Conspiring to Defraud Investors of Approximately $1 Million Through Bogus Investments

NEWARK—A disbarred Miami attorney admitted today to her role in a conspiracy that defrauded victims out of approximately $1 million by soliciting their investments in fraudulent schemes, U.S. Attorney Paul J. Fishman announced.

Katherine Ferro, 37, of Port St. Lucie, Florida, pleaded guilty to an information charging her with one count of conspiracy to commit wire fraud. She entered her guilty plea before U.S. District Judge William J. Martini in Newark federal court.

According to the information to which Ferro pleaded guilty and statements made in court:

Ferro conspired with others, including Joseph Suarez, 47, of Woodcliff Lake, New Jersey—then a New Jersey-based operator of an investment and development corporation—to commit wire fraud by inducing their victims to invest a total of approximately $1 million dollars into various fraudulent schemes, including a credit card factoring scheme and a scheme to purchase and resell foreign D2 diesel fuel. After their victims transferred money into accounts controlled by Ferro and others, Ferro and Suarez transferred that money into other accounts for their personal use.

Ferro admitted that she and Suarez convinced an individual to invest approximately $222,000 in a plan to purchase D2 diesel fuel from foreign sources and resell the fuel at a profit. Ferro also admitted that, contrary to the representations she and Suarez made regarding how the funds would be used, she disposed of nearly all of the $222,000 wired into her attorney trust account by transferring large amounts into other accounts.

Ferro and Suarez also used false representations to convince additional victims to invest approximately $500,000 in the D2 diesel fuel purchase and sale plan. Ferro executed a written escrow agreement with several of these additional victims, which stated, among other things, that the investment would remain in Ferro’s attorney trust account for the duration of the investment period. Days after the victims wired the $500,000 investment into accounts controlled by Ferro and Suarez, she transferred substantially all of the funds into other accounts. In addition, Ferro and Suarez concealed from their victims that she was disbarred in September 2009.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward; and IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge JoAnn S. Zuniga, for the investigation leading to today’s guilty plea. He also thanked the U.S. Securities and Exchange Commission’s New York Regional Office, under the direction of George S. Canellos; and the Bergen County Prosecutor’s Office, under the direction of John L. Molinelli, for their assistance.

The count to which Ferro pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is currently scheduled for July 11, 2012.

The government is represented by Assistant U.S. Attorney Jenny R. Kramer of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

The charges and allegations in the complaint charging Suarez are merely accusations, and the defendant is considered innocent unless and until proven guilty.

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.

Defense counsel: Assistant Federal Public Defender Linda Foster Esq., Newark