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Thom Mrozek (213) 894-6947 |
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Release No. 07-157
December 14, 2007
SANTA BARBARA MAN INDICTED IN INVESTMENT SCAM THAT SOLD UNREGISTERED SECURITIES IN INTERNET COMPANIES
Scam Bilked Investors across the Country out of more than $10 Million
A Santa Barbara man has been indicted on federal fraud charges related to a securities fraud scheme that took more than $10 million from victims while the defendant was free on bond in a separate case involving false statements to a bank.
De Elroy Beeler Jr., 50, who also maintained a residence in Tujunga, was named in a five-count indictment returned Thursday afternoon by a federal grand jury in Los Angeles.
The indictment outlines a scheme in which Beeler and three unnamed co-conspirators solicited hundreds of victims across the country to purchase unregistered stock in Bidbay.com, Inc. (also known as Auctiondiner.com, Inc.) and several related shell companies. Beeler lured victims by falsely stating that Bidbay.com and/or the shell companies would soon “go public” through an initial public offering on the Nasdaq Stock Market. Beeler allegedly claimed that Bidbay.com, which was unsuccessfully trying to develop an Internet auction site, would be acquired by Ebay, Inc. for $20 per share. Beeler allegedly told some victims that former President George H.W. Bush had agreed to join Bidbay.com’s board of directors.
Bidbay.com never conducted an IPO, Ebay never had any intention of acquiring Bidbay.com (and had even sued Bidbay.com for trademark infringement over the use of “bay” in its name), and former President Bush had never agreed to join Bidbay.com’s board.
Beeler and his co-conspirators also are accused of failing to disclose to investors that Beeler was a convicted felon; that there were several state securities regulatory actions against Bidbay.com, Beeler, and his co-conspirators; and that Bidbay.com and the related shell companies paid sales commissions to Beeler and other telemarketers of more than 50 percent.
The indictment alleges that Beeler personally received more than $4.8 million in commissions for his role in the scheme.
In the indictment returned yesterday, Beeler is charged with one count of conspiracy, three counts of mail fraud, and one count of criminal forfeiture related to the $4.8 million in commissions. If convicted, Beeler faces a statutory maximum sentence of 65 years in federal prison.
Beeler was convicted of making false statements to a financial institution and was sentenced in June 2002 to three years in federal prison. It was prior to him serving that prison term that Beeler allegedly participated in the Bidbay.com scheme. Following his release from prison in the false statements case in the summer of 2004, Beeler was placed on supervised release, but he was found to be in violation of the terms of his release and he was returned to prison for that violation earlier this year.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
The case against Beeler is the result of an investigation by the Federal Bureau of Investigation and IRS-Criminal Investigation.
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Release No. 07-157
Return to the 2007 Press Release Index