NEWS RELEASE
UNITED STATES ATTORNEY'S OFFICE
WESTERN DISTRICT OF VIRGINIA
John L. Brownlee United States Attorney Brian McGinn Public Affairs Specialist |
BB&T Building 310 1st Street, S.W., Room 906 Roanoke, Virginia 24011 (540) 857-2974 FAX (540) 857-2179 |
March 4, 2008
MEMBERS OF WIRE FRAUD CONSPIRACY TO SERVE TIME IN PRISON
United States Attorney John L. Brownlee announced today that Mary Dowdell, age 50, of Charlottesville, Gregory Smyth, age 57, of Dana Point, Calif., Mark Smyth, age 59, also of Dana Point, Calif., and Michael Hardesty, age 66, were sentenced yesterday in United States District Court for the Western District of Virginia in Charlottesville for their roles in a wire and securities fraud conspiracy.
“These defendants participated in a scheme in which many victims lost millions of dollars,” U.S. Attorney John L. Brownlee said today. “I want to thank the men and women of the FBI and the Securities and Exchange Commission for the outstanding work that brought these defendants to justice..”
Mary Dowdell was sentenced to 60 months of incarceration to be followed by three years of supervised release. Gregory Smyth was sentenced to 37 months of incarceration and Mark Smyth was sentenced to 41 months incarceration. Hardesty was sentenced to 16 months of incarceration.
Mary Dowdell was found guilty on wire fraud conspiracy charges following a week long jury trial in United States District Court for the Western District of Virginia in Charlottesville on November 29, 2007. Gregory Smyth and Mark Smyth entered guilty pleas to wire fraud conspiracy charges on November 28, 2007 and December 3, 2007, respectively.
Mary Dowdell is one of seven defendants, to date, to be convicted of federal charges that stemmed from an investigation into an international investment scheme headed by Terry L. Dowdell, formerly of Charlottesville.
Terry L. Dowdell pleaded guilty to securities fraud and wire fraud charges in June of 2004 and is currently serving a fifteen year term of imprisonment.
Beginning in 1998, Terry Dowdell and others operated a “Ponzi” scheme which raised investor funds through a purported investment program that involved the trading of short and medium term debenture instruments through the Vavasseur Corporation. The Vavasseur Corporation was created by Terry Dowdell for the sole purpose of perpetrating the fraud scheme. The government’s investigation revealed that none of the investors’ funds were actually invested or transferred into trading accounts, and that throughout the scheme, funds were instead pooled together and held in accounts controlled by Dowdell or other conspirators.
Between April 1998 and April 2002, the defendants raised at least $200 million from investors in the United States and abroad. Michael Hardesty participated in the Vavasseur scheme as a promoter. Hardesty created his own corporation, Hatchlands, Inc., through which he brought investors into the overall Vavasseur scheme.
The United States Securities and Exchange Commission initially investigated the Vavasseur scheme, and Terry Dowdell, and attempted to locate, recover and repatriate victims’ funds. During the course of the SEC’s civil litigation in November of 2001, a federal judge in Charlottesville entered a permanent injunction, freezing all of Terry Dowdell’s and Vavasseur’s funds. After the asset freeze was entered, Gregory and Mark Smyth received $850,000 transferred by wire from overseas bank accounts to accounts held by the Smyths.
The Smyths kept and spent approximately $500,000 from the funds they received, and in cooperation with Terry Dowdell, transferred thousands of dollars to Mary Dowdell and Rebecca Dowdell, Terry Dowdell’s daughter, both of Charlottesville.
Rebecca Dowdell pleaded guilty to conspiring to commit wire fraud on November 8, 2007, and is scheduled to be sentenced on March 31, 2008. Kenneth Mason, a promoter of the Vavasseur scheme, pleaded guilty to securities fraud and is scheduled to be sentenced on June 9, 2008. Robert June also pleaded guilty to securities fraud and is scheduled to be sentenced on March 31, 2008.
Shinder Gangar and Alan White, two co-defendants named in the securities fraud charge, were convicted on February 22, 2008, in Leicester, England on charges of investment fraud and other related charges. Both are in custody pending sentencing in England. Alan and White were professional accountants who participated in running the investment fraud scheme through their chartered accounting firm, Dobb White & Co.
The investigation of the case was conducted by the Federal Bureau of Investigation. Assistant United States Attorney Jean B. Hudson and Senior Attorney Steven J. Levine of the United States Securities and Exchange Commission prosecuted the case.