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October 25, 2013

MAN FACES CHARGES FOR ROLE IN $150 MILLION INVESTMENT FRAUD IN LARGEST PONZI SCHEME IN ORANGE COUNTY HISTORY

Filed under: California Defense Attorney — fayarfa @ 4:13 am

SANTA ANA – A man surrendered to the court today on a $17 million warrant for his role in a $150 million investment fraud Ponzi scheme, in which at least 80 Orange County victims lost over $21 million. This is the largest Ponzi scheme to be prosecuted in Orange County history.

Adam Jay Boskovich, 43, Laguna Niguel, is charged with 32 felony counts of the use of untrue statements in the purchase or sale of a security with a sentencing enhancement allegation for causing over $100,000 in loss. If convicted, he faces a maximum sentence of 45 years in state prison. Boskovich was charged Oct. 22, 2013, and turned himself in to the court on the warrant today, Oct. 24, 2013. He is out of custody on $1 million bail and is scheduled for a continued arraignment Dec. 20, 2013, at 8:30 a.m. in Department C-57, Central Justice Center, Santa Ana.

Co-Defendant

Co-defendant Gerard Frank Cellette, 48, formerly of Anoka County, MN, is accused of masterminding and committing the crime without ever entering the State of California. Cellette is charged (Case # 12CF1917) with 116 felony counts including 46 counts of selling unregistered securities, 43 counts of money laundering, and 27 counts of using an untrue statement in the purchase and sale of a security, with sentencing enhancements and allegations for property damage over $3.2 million, money laundering transactions in excess of $2.5 million, aggravated white collar crime over $500,000, and causing over $100,000 loss. If convicted, he faces a maximum sentence of 104 years in state prison.

Cellette is being held on $21 million bail and must prove the money is from a legal and legitimate source before posting bond. He was extradited from Minnesota to Orange County in February 2013 by Investigators from the Orange County District Attorney’s (OCDA) Bureau of Investigation. He is scheduled for a preliminary hearing Oct. 29, 2013, at 8:30 a.m. in Department C-57, Central Justice Center.

The Ponzi Scheme

At the time of the crime, Cellette lived in Minnesota and owned Minnesota Print Services, Inc, which he operated out of a room in his home. He is accused of falsely claiming to have large printing contracts with major corporations and seeking investors for fake printing projects with the promise of 10 to 15 percent returns on investments. Cellette is accused of presenting investors with fraudulent copies of contracts, known as “deal sheets,” which contained details including the name of the fictitious corporation/customer, the total contract price, and the time period within which the investment would be returned with interest (generally 60 to 90 days).

Cellette is accused of operating a massive Ponzi scheme by using funds from new investors to pay back previous investors their initial investment plus interest with the intention of misleading them into believing that the investments were legitimate and lucrative and to encourage them to continue investing with him. He is accused of committing this crime across the country in States including California, Minnesota, Georgia, Arizona, Colorado, Hawaii, and Illinois

Crime in Orange County

In 2005, Cellette is accused of meeting an Orange County man, Steven Q., who was visiting a relative in Minnesota, and offering him an investment opportunity with Minnesota Print Services. After Steven Q. invested with Cellette, the defendant is accused of paying back the initial investment plus returns and offering Steven Q. future investment opportunities.

Steven Q. returned to Orange County and, along with friends Robert A. and defendant Boskovich, continued investing and receiving returns from Cellette. The three men are accused of unofficially acting as brokers for Cellette in Orange County and throughout California and Cellette is accused of providing the three men with lists of fictitious printing contracts, for which funding would be needed. Boskovich and the other two men are accused of then obtaining investors for the defendant for these projects, including family members, friends, and personal and professional associates.

Boskovich is accused of being unaware prior to that time of Cellette’s scheme, but simultaneously conducting his own scheme by misrepresenting or falsifying information to investors in order to collect higher investments, and therefore receive higher commissions. He is accused of falsely indicating to investors that he had personally examined Cellette’s operations, contracts, and insurance policies.

Cellette is accused of providing high quality brochures and deal sheets to entice the new investors to invest in the company. New investors provided their funds to either Steven Q., Robert A., or Boskovich, who are accused of then wire-transferring the investments to Cellette. Cellette is accused of fraudulently receiving and paying back all investments and returns to Orange County through wire transfers. For the entire duration of the crime, Cellette is accused of never entering the State of California.

Over time, Cellette is accused of slowing in his repayment of investments and returns to the Orange County victims. In 2009, Steven Q., Robert A., and Boskovich became suspicious and asked the defendant for copies of his financial records. Cellette is accused of providing falsified records and contracts to show that he was receiving payment from corporation and printing clients.

In September 2009, the three men flew to Minnesota to confront the defendant, where they determined based on legitimate bank records that Cellette was running a Ponzi scheme.

Loss Amount and Investigation

Between 2005 and 2009, Cellette is accused of receiving over $150 million from over 80 investors in from Orange County. The net loss to all Orange County victims is over $21 million. Boskovich is accused of being responsible for facilitating $17 million in investor losses out of the $21 million.

Nationwide, Cellette is accused of receiving over $200 million, including the $150 million from Orange County, with net loss over $53 million, including the $21 million from Orange County.

Cellette is accused of spending the stolen money on luxury personal items including cars, time on private jets, and multiple homes with features including a Go-Kart track, bowling alley, and 50s-style malt shop.

Boskovich is accused of collecting over $1 million in commission in the Ponzi scheme.

The case was referred to the Hennepin County Attorney’s (HCA) Office in Minnesota. In November 2009, HCA contacted the OCDA regarding the Orange County victims. Cellette was prosecuted and convicted in Minnesota for his victims in that state and is currently serving a six-year prison sentence in that case. He was extradited to Orange County in February 2013 to face charges in the local case.

The OCDA Bureau of Investigation investigated the large Orange County case and the OCDA is prosecuting the defendant for all the California victims.

Senior Deputy District Attorney Marc Labreche of the Major Fraud Unit is prosecuting this case.

*Defendant is accused of causing $17 million in losses to 80 victims

Orange County District Attorneys Office / Case # 13CF3355 / October 24, 2013

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