By Khalida Sarwari
The chief financial officer of a San Jose investment company pleaded guilty in San Jose Federal Court today to one count of wire fraud and one count of tax evasion as part of an investment fraud scheme, according to U.S. Attorney Joseph Russoniello.
Gregory Dixon, 39, of Marysville, admitted to his involvement in Financia Investing Inc., which he operated along with another colleague. As treasurer of the company, he admitted that he had lied to investors about how their money would be used, according to the U.S. Department of Justice.
Instead of investing their money, Dixon and his colleague diverted the money for their own use, then used other investors’ funds to pay off earlier investors. Some of the money they did invest was done at a far lower amount than represented to the investors.
Dixon further developed the scheme by sending out false IRS 1099 forms to investors that represented non-existent earnings on Financia accounts in addition to false monthly earnings statements, according to the Department of Justice.
An investigation led by the FBI and the criminal investigation unit of the Internal Revenue Service also revealed that Dixon and his colleague had continued to receive and accept incoming wire transfers from investors even though the company’s trading activity had completely stopped by July 2006, at which time his colleague was gravely ill with cancer.
Dixon had told investors that the company’s investment activities would continue and that after his colleague’s death, he would resolve any matters with an attorney to ensure that all investors received their money, according to the Department of Justice.
He also told investors that the company’s bank accounts were depleted and then withdrew about $24,060 from one account and about $414,343 and $80,000 from other accounts for personal expenses that included jewelry for a new girlfriend at the time.
Dixon did not pay any federal taxes for the income that he made from Financia, which would have totaled about $145,150 for 2006, according to the Department of Justice.
The maximum statutory penalty for each count of wire fraud is 20 years in prison and a fine of $250,000; for each count of tax evasion, the maximum statutory penalty is five years in prison and a fine of $250,000.
Dixon is scheduled to be sentenced on Jan. 11, 2010.