USA Springs fraudster sentenced to five years in prison
Nevada court finds ex-lawyer guilty in $5.6 million conspiracy to bilk NH firm's investor
An executive involved in a conspiracy to defraud $5.6 million from investors – the largest victim being a board member of what was then New Hampshire-based USA Springs – is the first to be sentenced in the case.
A federal court in Nevada sentenced Joseph Micelli to five years in prison. He pleaded guilty to a single count of wire fraud shortly before Thanksgiving, and he is to start serving his sentence in May.
That’s the same month sentencing hearings are to be held for co-defendants James Warras of Las Vegas, Nev., and Anthony Brandel, a Wisconsin consultant, who were both convicted by a federal jury in December.
The three were all guilty of being involved in a conspiracy with Malom Group AG, a Swiss firm, by forging documents and otherwise purporting that the company had more money than it had. Micelli, described as “a compliance officer for Malom,” forged some of the documents himself, and filed an affidavit to the federal bankruptcy court in New Hampshire that Malom had $16 million in the bank when he knew it wasn’t true.
“By walking into a Bankruptcy Court and telling brazen lies, Mr. Micelli’s scheme displayed an unusual disdain for the law,” said prosecutors in a sentencing memo.
Such reassurances induced USA Spring board member William Gianopoulos to give Malom $1.2 million to obtain a $60 million loan from Malom in order to get USA Springs out of bankruptcy.
Another defendant in the case, Sean P. Finn, is awaiting extradition in Canada and Martin Schlaepfer and Hans-Jurg Lips, Malom’s CEO and chairman, are still at large, last seen in Switzerland.
USA Springs went bankrupt in 2008, trying to find financial backing to complete the half-finished bottling plant. In the summer of 2011, Malom seemed to come to the rescue, first promising that it would raise the money selling European bonds, guaranteeing either a 50 percent return in 120 days or a complete refund in addition to a 4 percent penalty.
Malom never came up with the money, spelling the end of USA Springs’ controversial attempt to withdraw and bottle 300,000 gallons of groundwater a day at a site bordering Barrington and Nottingham. That 189-acre site is still languishing for sale at a price tag of $1 million.
Prosecutors said Micelli, who was disbarred from practicing law in California in 1997, held himself out as a practicing attorney during the scheme.
It’s doubtful that the court will show any leniency when it comes to sentencing Warras and Brandel, who were convicted on multiple counts of fraud.
In February, the court denied Warras bond so he could travel for treatment for skin cancer, arguing that he could get treated in prison, that he continues to contact witnesses in violation of his conditions, and that he “transferred significant money to foreign jurisdictions and maintains significant contacts overseas,” according to a Nevada court ruling.
The court also rejected Brandel’s motion for “compassionate release” to attend his mother’s funeral, because he too has transferred money to foreign jurisdictions.