LAS VEGAS, Nev. – Jason Demko, a Canadian national currently
residing in Las Vegas, and Michael Guariglia, of Buffalo Valley, Tennessee,
were sentenced today to 46 months in prison and five years of probation,
respectively, for defrauding small business owners of nearly 12 million
dollars, announced U.S. Attorney Nicholas A. Trutanich for the District of
Nevada and Special Agent in Charge Aaron C. Rouse of the FBI.
“Small businesses are an important part of all communities
in Nevada and across the country,” said U.S. Attorney Trutanich. “Among other
things, they create meaningful jobs, support local neighborhoods, and provide
opportunities for entrepreneurs. We appreciate the opportunity to partner with
the FBI in bringing these defendants, who targeted small business owners, to
justice.”
“The FBI will pursue those who plan, scheme and defraud
innocent people for their own personal gain,” said Special Agent in Charge
Rouse. “I'd like to thank the men and women of the FBI who work hard every day
to identify and apprehend those responsible for taking advantage of trusting
citizens; in this case small business owners."
Demko, 43, pleaded guilty on February 14, 2018, and
Guariglia, 53, pleaded guilty on March 20, 2018. In addition to the prison
term, U.S. District Judge Kent J. Dawson ordered both men to pay restitution
(jointly and severally) in the amount of $11,509,087. Demko was also ordered to
pay a criminal forfeiture money judgment in the amount of $307,060, and
Guariglia was ordered to pay a criminal forfeiture money judgment in the amount
of $68,666.
According to court documents, from about December 2009 to
February 2014, Demko, Guariglia, their co-defendants, and others operated a
telemarketing scam commonly known as the “grant-fee scam” targeting small
business owners. In the grant-fee scam, criminals contact small business owners
claiming to act as a broker for corporations, charitable foundations, or
government agencies looking to give money away. The criminals ask the victims
about their businesses, then claim to have found high dollar grants matching
the victims’ businesses. For a substantial fee, the criminals offer to file the
paperwork needed to obtain the grants, promising that the cost of their
services will be covered by the grants the victims will assuredly receive. In
reality, no such grants exist. The criminals simply take the victims’ money.
Often, criminals carrying out grant-fee scams then embark on
a campaign of “lulling” and “reloading.” Lulling is a series of excuses and
distractions designed to make the victims believe that the promised grants are
imminent, if only this bit of paperwork or that action were completed. The main
purpose of lulling is to delay the victims’ actions to recover the funds and
delay the victims’ reports of the crime to law enforcement. Lulling is often
done hand-in-hand with reloading, thus scamming more money from victims to pay
additional sums for “unanticipated” documents or tax charges to obtain the
promised grants. In reality, no such documents or tax charges are needed
because no grants exist. Again, the criminals simply take the victims’
money.
Demko, sometimes using the alias Jeff Ross, together with
Guariglia, their co-defendants, and others, defrauded hundreds of individuals
and families out of nearly 12 million dollars. To carry out their scheme,
Demko, Guariglia, their co-defendants, and others made false representations
and promises to small business owners to persuade and induce them to pay
initial fees, usually between $2,500 and $5,000, for goods and services the
victims thought would help them obtain grants for their businesses. The small
business owners were told that the total cost for obtaining a grant was between
$10,000 and $15,000, depending on the total amount of funding requested, and that
the remaining fees would not be charged until the owners received 100 percent
of the grant funding. Among other things, Demko, Guariglia, and their
co-defendants falsely stated that they had obtained grants for other clients,
when in fact they had not done so. The defendants also re-solicited clients for
additional fees, including fees for business plans, when they knew that the
plans were not going to assist the clients in obtaining any grants. They knew
that the true purpose of their solicitations was to obtain funds to personally
enrich themselves.
Demko, Guariglia, and their co-defendants operated their
scam under JCD Business Services; Foundation Processing Center; Summit Business
Consultants, Inc.; Inner Circle Corp., LLC; Sierra Investment Group, Inc.;
Valley Business Development; Quid Corp.;
Interlan Charitable Foundation; Interlan Financial Corporation; Compass
National, LLC; Compass National, Inc.; Direct Business Company, Inc.; Goldcom
LLC; and Company Planning LLC.
Co-defendants Lorraine Riddiough (Demko’s mother, a Canadian
national residing in Las Vegas who also goes by the name Lorraine Ann Mader)
and Lissette Alvarez (a Las Vegas resident) have pleaded guilty. Alvarez was
sentenced to three years probation. Riddiough is scheduled to be sentenced by
U.S. District Judge Dawson on March 19, 2020.
The U.S. Attorney’s Office and the FBI urge the public to be
alert to potential scams. If something sounds too good to be true, it probably
is. The Federal Trade Commission posts alerts describing many different types
of scams on its website at https://www.consumer.ftc.gov/features/scam-alerts.
If you or someone you know has been the victim of a scam, please contact law
enforcement without delay.
The case is a result of an investigation by the FBI.
Assistant U.S. Attorneys Daniel Cowhig and Kimberly Frayn prosecuted the case.
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