Man sentenced in Las Vegas for role in penny stock fraud scheme

Former Pahrump businessman Jeffrey Turino was sentenced Monday to the six years he already has spent in custody for his role in a massive pump-and-dump scam that authorities once said generated as much as $70 million in criminal proceeds.

He also was ordered to pay $35 million in restitution.

The sentence comes two decades after Turino, 60, started conspiring to issue billions of unregistered one-cent-or-less shares in what the government describes as hollow corporate shells. It follows his guilty plea in August to a single count of conspiracy to commit securities fraud.

“First and foremost I would like to apologize … for my inability to make good decisions,” Turino, a bald man with a thick gray beard, said at his sentencing hearing before U.S. District Judge Jennifer Dorsey. “It’s no one’s fault but my own.”

COMPLEX FRAUD RING

Turino’s role in the penny stock fraud conspiracy lasted from 1997 until his arrest in the Netherlands in 2010. In pleading guilty, he admitted to his role in a complex fraud ring.

Through the scheme, he and others acquired companies, issued press releases that falsely represented the activities and profits of the companies, and used the phony promotional information to sell off hundreds of millions of unregistered shares.

When that cycle ran its course, Turino and others would reincarnate the companies with announcements of mergers and new business activities, and the process would start again. Several companies that drew investigators’ focus were incorporated in Southern Nevada.

In the plea deal his lawyers negotiated with federal prosecutors, Turino agreed to provide testimony against some of his alleged co-conspirators.

But the highly complex case has languished in federal court for nearly a decade. Two of the co-conspirators have died. One is a fugitive in Russia, and a prosecutor joked recently that his extradition is no more likely than that of NSA whistleblower Edward Snowden. Another’s health has declined to such a point that he is undergoing evaluations to determine whether he is fit to stand trial.

Assistant U.S. Attorney Kathryn Newman said Monday that Turino “has provided information that is useful” regarding the remaining defendants in the case.

The plea agreement allowed Turino to escape charges of racketeering, insider trading, money laundering and other stock fraud-related counts contained in a superseding indictment against him and nine others. It also eliminated his culpability in any crimes involving CMKM Diamonds Inc., a tiny company that represented the core focus of the federal investigation and resulting indictment.

CMKM DIAMONDS INC.

The government charges that the defendants in the case misrepresented CMKM as a profitable diamond mining company in order to induce investors while concealing its lack of any remarkable assets. The indictment included allegations that defendants illegally authorized the issuance of hundreds of billions of shares.

Defense attorney Kathleen Bliss wrote in her sentencing memorandum that Turino “did not manage or otherwise issue or cause to be issued any shares in CMKM. … He did, however, receive money from the sale of CMKM shares, approximately $4 million.”

Turino, in addressing the court, said one of his now-deceased co-defendants was “printing stacks of (securities) certificates” and selling them to investors.

“People were just simple victims of a scam,” he said.

Bliss blasted the government’s initial calculation of $70 million in criminal proceeds derived from the conspiracy.

“There is no way to prove $70 million in losses or even identify victims; this is the problem with most security fraud cases of this nature,” she wrote.

She also disagreed with the government’s description of Turino’s companies as hollow shells.

FAMILY FEUD

Bliss referenced two other people who she said made efforts to destroy Turino once he started cooperating with the government.

One of them is alleged co-conspirator John Edwards, the defendant whose health has been declining. Edwards described Turino as a “master mind fraudster” and sent a letter to court that accuses him of stealing “my discovery documents and all my legal work.”

The other is a former cellmate of Turino’s who is being detained in Nevada pending trial on charges of wire fraud and money laundering in an unrelated case. Jihad Anthony Zogheib has sent numerous letters to the court accusing Turino of kidnapping his wife, Donna Walker Zogheib. Walker Zogheib spoke at the sentencing hearing on Turino’s behalf and said she was in the process of annulling her marriage.

Walker Zogheib’s teenage children, meanwhile, defended their father in statements to the court Monday. They told the judge their mother had abused them and deserted them.

Judge Dorsey expressed sympathy for all parties involved, but said the family dispute was irrelevant to the facts of the case.

Acknowledging the judicial and prosecutorial resources Turino saved by admitting his guilt, Dorsey imposed a sentence of time served for the six years he was incarcerated before his conviction. The sentence was jointly requested by prosecutors and defense attorneys.

Dorsey also sentenced Turino to five years of supervised release.

Contact Jenny Wilson at jenwilson@reviewjournal.com or 702-384-8710. Follow @jennydwilson on Twitter.