Founder of Litigation Marketing Company Guilty of Multi-Million Dollar Securities Fraud

https://www.justice.gov/usao-sdca/pr/founder-litigation-marketing-company-guilty-multi-million-dollar-securities-fraud

Department of Justice
U.S. Attorney’s Office
Southern District of California

FOR IMMEDIATE RELEASE
Tuesday, November 22, 2016

Founder of Litigation Marketing Company Guilty of Multi-Million Dollar Securities Fraud

SAN DIEGO – David Aldrich pleaded guilty in federal court today to defrauding investors through litigation marketing company PLCMGMT LLC dba Prometheus. Aldrich admitted that he conspired with James Catipay, who pleaded guilty on October 26, 2016, to lie to investors when convincing them to invest.
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To convince investors to entrust Prometheus with their funds, Aldrich and Catipay created marketing materials for prospective investors. The marketing materials falsely stated that the tort plaintiffs that Prometheus identified through its legal marketing would, as soon as the claims were filed, be entitled immediately to funds from legal actions that had already been settled and for which funds had been placed on escrow.

In fact, only 1% of the tort plaintiffs’ legal actions had been settled, and an overwhelming majority of the legal actions had not been litigated or successfully negotiated for settlement. The marketing materials also represented that investor funds, once received by Prometheus, were “100%” secured by a legally enforceable lien and that investors could redeem their investments on demand. The truth was that investor funds were never secured by a lien, and Prometheus had denied, and would continue to deny, a large majority of redemption demands received from investors.

In exchange for investing in a “Prepaid Forward Contract,” Prometheus promised to pay investors returns ranging from 100% to 300%, depending on the amount invested and the time horizon for the investment. Based on these lies, and during the time the Aldrich was associated with Prometheus, approximately 200 investors entrusted Prometheus with more than $8.5 million. Despite the defendant’s promises, Prometheus was only able to pay back approximately $300,000 of this amount. Most investors, many of them retirees, lost their entire investments.
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