Two more sentences issued in USA Springs-related fraud
Seven-year prison terms issued in Nevada trial
Two more officials involved in a conspiracy to defraud more than $6.3 million from investors, including a large shareholder in the defunct New Hampshire-based USA Springs water bottling startup, have each been sentenced to more than seven years in prison.
A federal court in Nevada last month sentenced James Warras of Las Vegas and Anthony Brandel, a Wisconsin consultant, to 87 months. Brandel, who is appealing his conviction, should also pay $4.9 million in restitution, federal prosecutors say. Hearings on that proposal are scheduled next month.
The two, along with Joseph Micelli, were 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, Malom’s compliance officer, pleaded guilty to forging some of those documents, was sentenced to five years imprisonment in March.
In December, Warras and Brandel were found guilty of numerous counts by a jury after a five-day trial.
A key witness in the trial was William Gianopoulos, a swimming pool contractor from Lawrence, Mass., who was on the stand for two days. Gianopoulos owned a 3.5 percent stake in USA Springs, a startup that was battling neighbors for permits to withdraw and bottle 400,000 gallons a day at a 189-acre site bordering Barrington and Nottingham.
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. But it wanted the debtors to come up with $1.2 million to obtain the $60 million needed to complete the plant.
When nobody else stepped forward Gianopoulos offered most of his savings, putting up a $500,000 retirement fund, equity in his properties and then even borrowing $100,000 from his sister.
Gianopoulos, testified that officials of Malom – which stand for Making a lot of money – promised a large return if the effort succeeded, and his money back if it failed.
“We were told multiple times that Malom had hundreds of millions of dollars,” said Gianopoulos, who said he was shown bank accounts to that effect.
The loan never materialized, and most of Gianopoulos’ money had already been pocketed by Malom officials and its associates. USA Springs was liquidated, and the property where it was to be located remains for sale for $1 million.
‘USA Springs fiasco’
It turns out that Malom never had the millions that it said it did. But the defendants said that they believed otherwise and were victims themselves. Warras, who had the title of executive vice president, said that he was more of a secretary, just transferring documents.
“Documents flowed through him,” said his attorney. “There was no evidence that Mr. Warras actually knew that these documents that his boss were providing him were fake.”
Brandel, a consultant for Malom, said that he believed that Malom was legitimate, and only thought otherwise after the “USA Springs fiasco.”
Brandel was not so much involved in USA Springs, but in other fraudulent deals, he was “part of the pitch,” said prosecutor Brian Young. He said Brandel should have known that things were shaky when he got an email about Micelli having been disbarred from practicing law in 1997, or how several of Malom’s officials were detained by Swiss authorities on fraud charges.
Young added, “You want to know how Mr. Warras is different than the victims in this case? Because he got a ton of money. That's how he's different, and that's how Mr. Brandel is different as well.”