A fugitive charged with an audacious $35 million fraud — throughout which he allegedly knowledgeable consumers he was a hedge fund billionaire, a Harvard MBA and a specific forces veteran who had been twice wounded in Iraq — was arrested by an FBI SWAT crew in California after days on the lam, authorities talked about Wednesday.
Las Vegas resident Justin Costello, 42, is accused by federal prosecutors and the Securities and Alternate Price of swindling a whole lot of consumers and others as part of a flowery rip-off that touted his purported efforts to assemble a cannabis conglomerate, amongst totally different points.
One amongst his companies, Pacific Banking Corp., supplied banking suppliers to three marijuana companies. Authorities talked about he moreover used it to divert a minimum of $3.6 million to himself and totally different firms he owned.
Moreover they are saying that he engaged in a scheme that worth better than 7,500 consumers about $25 million by making false claims about plans by one in every of his private companies to purchase 10 totally different firms.
One different 29 consumers misplaced $6 million after investing immediately with Costello based totally on his false representations, prosecutors talked about.
Costello, who moreover had a residence in La Jolla, Calif., used about $42,000 of consumers’ money for costs associated collectively together with his bridal ceremony to Katrina Rosseini, prosecutors talked about.
A video of that bridal ceremony reviewed by IHNSexhibits every a cake and an ice sculpture boasting the James Bond movie emblem of the numbers “007” over a semi-automatic pistol and a belly-dancing effectivity by Rosseini, who won’t be charged throughout the circumstances coping with her husband.
“Mr. Costello allegedly knowledgeable many tall tales to steer victims to take a place tens of thousands and thousands of {{dollars}} — money he then used for his private revenue,” talked about U.S. Lawyer Nick Brown of the Western District of Washington, in an announcement.
“In a flowery scheme involving shell companies, penny shares, and financial suppliers for marijuana corporations, Mr. Costello used Twitter, press releases, securities filings, and claims of good wealth to paint a picture of fabulous financial success,” Brown talked about.
“In reality that picture was a mirage,” he talked about.
An authorized skilled for Costello, who beforehand lived in Bellevue, Washington, didn’t return a request for comment.
Costello had agreed by the use of his lawyer to surrender last Thursday to the FBI office in San Diego after being educated he had been indicted on jail costs by a grand jury in federal courtroom in Washington state a day earlier, regulation enforcement officers knowledgeable .C. The grievance accuses him of twenty-two counts of wire fraud and three counts of securities fraud throughout the case.
Nonetheless Costello on no account confirmed up as promised at that FBI office that day, officers talked about.
On the an identical day, the SEC slapped Costello and an alleged co-conspirator David Ferraro, with a civil lawsuit accusing them of defrauding consumers and of using Twitter to promote penny shares with out disclosing their very personal product sales of the shares as prices rose.
As throughout the federal indictment, the SEC accuses Costello of fraudulent conduct in reference to 2 publicly traded companies he beforehand managed, Hempstract and GRN Holding Corp.
The SEC talked about in a single event, Costello supplied a married couple $1.8 million in stock at a better than 9,000% mark-up to its value.
Ferraro, a 44-year-old Radford, Va., resident who was not charged throughout the jail indictment with Costello, didn’t immediately return a request for comment from .C.
Ferraro is accused of using the Twitter account with the cope with @computerbux, which had almost 10,000 followers in late 2019, throughout the scheme.
After Costello didn’t hand over Thursday, the FBI rapidly after issued a “Wanted” poster that features Costello, noting he was a fugitive.
“He may be touring collectively together with his partner, Katrina Rosseini, who won’t be a fugitive,” talked about that poster, which included a variety of photos of Costello, a number of of which included Rosseini.
The poster well-known that the couple might be touring with their small canine, who is known as Harry.
On Tuesday night time time, Costello was arrested by an FBI Swat crew in El Cajon, Calif., in San Diego County, primarily based on Emily Langlie, a spokeswoman for the U.S. Lawyer’s Office for the Western District of Washington.
On Wednesday morning, Costello was taken to a hospital after complaining of properly being factors, Langlie talked about.
It’s not however acknowledged when he’ll make his first look in federal courtroom in California.
Costello’s apprehension was welcome data to Steven Selna, an Oakland, Calif., lawyer whose shopper, CCSAC Inc., was certainly one of many three cannabis companies allegedly swindled by Costello.
CCSAC has a pending lawsuit in direction of Costello and his companies in U.S. District Courtroom for the Northern District of California, over his failure, no matter claims quite the opposite, to pay $2.2 million in taxes to the state of California on CCSAC’s behalf from its account at Pacific Banking Corp.
Selna knowledgeable IHNSthat Costello was holding a minimum of $2.9 million that belongs to CCSAC, which he talked about has a severe presence in California by the use of retail and distribution operations. The company, which plans to broaden to the East Coast in 2023, believes its monetary loss from Costello may be as extreme as $5 million.
The jail indictment in direction of Costello accuses him of fraudulently diverting $300,000 of CCSAC’s money deposited with Pacific Banking to purchase shares in a publicly traded shell agency in 2019 for the wants of lastly ending a reverse merger with Costello’s then-privately held agency, GRN Holding Corp.
GRN’s shares grew to turn into publicly traded on account of that merger.
GRN Holding’s most modern SEC submitting says that Costello resigned as CEO of the company in April, the an identical month that he solder 144 million shares of GRN Holding to its current CEO for $140,000.
The indictment moreover says that at various events all through Costello’s alleged schemes, he described one different agency he ran, GRN Funds LLC, as having better than $1 billion under administration, and $600 million under deposit.
That declare was not true, the grievance says.
In line with the indictment, a select throughout the civil case filed in direction of Costello by CCASC last month ordered him to declare under the penalty of perjury the determine of the financial institution, and totally different particulars in regards to the account the place the stability of CCSAC’s funds was being held.
Costello submitted a sworn declaration saying that a minimum of $2.9 million in CCSAC’s funds had been being held in a credit score rating union in Tacoma, Wash., throughout the determine of GRN Funds LLC, the indictment notes.
Nonetheless reverse to that declare, the GRN Funds checking account on the credit score rating union “has a steadiness of $15.35 as of September 9, 2022,” the indictment talked about.
“All we’re keen about is getting our shopper’s a reimbursement, and if it facilitates that it’s a good issue,” Selna talked about.
The lawyer moreover talked about that Costello, in dealings with CCSAC, “positively launched himself as being extraordinarily worthwhile on this commerce, and that he would defend our shopper’s money. And that wasn’t true.”
The indictment says that when Costello solicited funds from consumers, he made false claims that included saying he graduated from the School of Minnesota and had a grasp’s diploma in enterprise administration from Harvard.
He moreover claimed to have carried out two excursions in Iraq as a member of the Specific Forces, and been shot twice, leaving shrapnel in his leg, the grievance says.
Costello moreover falsely talked about “he was a billionaire”; “he managed money for wealthy folks, along with a Saudi sheikh”; and “he had 14 years of experience on Wall Street,” the indictment talked about.
“None of that’s true,” a press launch by U.S. Lawyer Brown’s office talked about.
The indictment says that in 2019, when an internet primarily based article questioned Costello’s statements about his coaching, he had GRN Holding Corp. issue an 8-Okay submitting with the SEC which acknowledged that Costello “was a graduate of Winona State School with a degree in Public Administration who attended Harvard School nevertheless didn’t graduate.”
“This assertion was moreover misleading,” the indictment talked about. It well-known that “Costello solely took one course in Harvard’s persevering with coaching program.”
That exact same 12 months, Costello had GRN Holdings issue a press launch stating it had non-binding letters of intent to amass a minimum of 10 companies, and that throughout the following months issued 10 press releases asserting the completion of due diligence for each agency, the indictment talked about.
Filings by GRN Holding with the SEC moreover mirrored these claims.
Nonetheless “GRN Holding Firm on no account achieved the acquisitions of the companies, though Justin Costello was an affiliate, shareholder, proprietor, or supervisor of each agency,” the indictment talked about.
“Quite a lot of the companies had been in its place acquired by Renewal Fuels Inc., one different [over-the-counter market-]traded agency managed by Justice Costello.”
And reverse to Costello’s claims to consumers in GRN Holdings, “the companies had little or no earnings or belongings,” the indictment talked about.
Between July 2019 and May 2021, “over 7,500 consumers purchased and supplied GRN Holding Firm stock whereas Justin Costello was making, and persevering with to be made, the material misrepresentations relating to GRN Holding,” the indictment talked about.
“Collectively these consumers misplaced roughly $25 million.”
