Four accused in research investment scam
BY MICHELLE BRADFORD ARKANSAS DEMOCRAT-GAZETTE
Four men concocted an investment scheme involving a Rogers company they claimed was developing a wonder drug, an FBI investigation contends.
A complaint filed Tuesday in U.S. District Court in Fort Smith accuses James William Bolt, John C. Dodge, Melvin Lynn Robinson and Leroy H. Hoback of wire fraud. Formal charges have not been filed.
An FBI affidavit said Bolt, Dodge, Robinson and Hoback all committed wire fraud between April 2005 and May in their positions with the company, Shimoda-Atlantic.
Specifically, the men used telephone calls, faxes and email to commit fraud, made false representations about a drug, Xenavex, agreed to pay a secret kickback and made false statements about the cash flow analysis of the company, the affidavit states.
The U.S attorney’s office for the Western District of Arkansas recused from the case, Assistant U.S. Attorney Bill Cromwell said Thursday. Cromwell referred questions to Peter Loewenberg, an attorney with the U.S. Justice Department in Washington, D.C. Loewenberg could not be reached for comment Thursday.
U.S. Attorney Bob Balfe investigated Bolt and Dodge in 2002 when he was the Benton County prosecuting attorney. The investigation, in part, led to an Arkansas Securities Department probe of Golf Entertainment Inc., a Springdale company whose principals were Bolt, Dodge and Robinson.
In September 2002, the Arkansas Securities Department found that Golf Entertainment - later renamed Sienna Broadcasting - illegally transferred stock in May 2002.
In February, the FBI began investigating Shimoda-Atlantic, which was supposedly developing Xenavex, a pharmaceutical drug.
An FBI agent posing as a financial consultant from Florida e-mailed Shimoda-Atlantic in April 2005, saying he had clients interested in investing.
The FBI agent received an email from Shimoda-Atlantic saying it “was under contract for sale to a foreign subsidiary of a division of Pfizer,” and didn’t have any investments available, the affidavit states.
In June, the agent received another e-mail saying the deal with Pfizer fell through and that the company was seeking “interim financing of $250,000 with a total project financing of $5 million dollars,” the affidavit states.
The e-mail said the $250,000 would allow the company to “launch the Phase II lung cancer study that we have delayed since early April.”
The company told the agent in August it was moving to a new location and looked forward to a meeting. In October, the agent received in the mail a 68-page PowerPoint presentation from the company seeking a $2.5 million “overall funding commitment.”
The presentation said Xenavex was approved by the Food and Drug Administration to treat heart problems, herpes simplex and eczema. The drug, however, has not been approved by the FDA, the affidavit states.
The FBI agent and an informant met in person with company officials in February in Rogers. At the meeting, Robinson said that an investor who put up $2.5 million would receive a 20 percent share in the company.
In a second meeting in February, the agent and the informant told Dodge and Hoback the investment was too speculative for them, but they had a client who was a wealthy Middle Eastern man who wanted to invest. The agent and the informant sought a kickback fee from Dodge and Hoback in exchange for providing the investor.
In March, the agent told Robinson his client had agreed to invest $2.5 million. Robinson said if the client invested $3 million, the agent and the informant would receive a fee in return, which the company would hide from the Middle Eastern client.
In March, Dodge sent the agent a fax from Arkansas with a written agreement in which Shimoda-Atlantic agreed to pay the agent and the informant $325,000.
Finally in May, the agents met with Bolt, Dodge, Robinson and Hoback at Shimoda-Atlantic’s office in Rogers. The four defendants acknowledged the $325,000 kickback payment and agreed not to tell the client, the affidavit states.
The defendants gave the client, an undercover police officer, false information in a cash-flow analysis and didn’t disclose the $325,000 hidden fee, the affidavit states.
In 1983, Bolt was convicted in U.S. District Court in northern Oklahoma of mail fraud and making material false statements to a federally insured bank, court documents show. He operated a bogus business called Saturation Systems, which he ran from a small Tulsa office, according to an appeal he lost in the case.
He was convicted of theft by deception in Washington County in 1993, court records show. He later filed a federal racketeering suit against prosecutors in the case, but a judge dismissed the suit.
In 1998, Bolt, Dodge and others filed a petition calling for a grand jury to investigate then-Benton County Sheriff Andy Lee. A judge denied the request.
This story was published Friday, August 18, 2006 |
