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Latest Legal News from the Criminal Courts in Houston, Texas
April 23, 2007
FORMER PRESIDENT OF BROKERAGE FIRM SENTENCED TO PRISON FOR WIRE FRAUD
(HOUSTON, TX) – Juan Carlos Martinez, 44, has been sentenced to the statutory maximum prison term for devising a wire fraud scheme to defraud clients of a securities broker dealer firm, United States Attorney Don DeGabrielle announced today.
Martinez, a citizen of Spain, was sentenced to serve five years in federal prison without parole for his wire fraud conviction and ordered to pay $10.6 million in restitution to the Securities Investor Protection Corporation (“SIC”).
Until 1996, Martinez was president of the firm, MBM Investment Corporation (“MBM”), which was then located at 5051 Westheimer, Houston, TX. Martinez made unauthorized transactions in MBM customer accounts and, in order to conceal the unauthorized transactions, sent counterfeit account statements to customers. For example, Martinez, in Houston, Texas, using interstate wire facilities, transmitted instructions to Bear Stearns, in New York, to withdraw a total of $6.76 million from accounts belonging to MBM customers, and to replace the funds with highly risky bonds issued by a company based in Bermuda that was attempting to open clothing stores in Russia.
Martinez lacked discretionary authority over the accounts and he did not seek or obtain authority from the account holders to purchase the bonds. When the account holders learned that money had been taken from their accounts to purchase Russian bonds, they contacted personnel at MBM and attempted, unsuccessfully, to recover their money. Martinez left the offices of MBM on April 30, 1996, and disappeared. The SIC was subsequently required to pay out millions in compensation to MBM’s customers when the Russian bonds defaulted. The company collapsed in 1996.
Martinez was arrested in Spain in June, 2006, and extradited to the United States in November 2006 to face the pending indictment in this district for his fraud scheme. He pleaded guilty to wire fraud in January 2007. Martinez has been in federal custody since his extradition from Spain and will remain in custody to serve his sentence.
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