Naming his business Fraud Guarantee did the Giuliani-linked businessman few favors.
MANHATTAN (CN) — A Florida businessman linked to Rudy Giuliani was sentenced on Monday to a year and a day in prison for his involvement in a $2 million investor fraud scheme and lying to the government.
“Of course the irony of the business’s name, Fraud Guarantee, is hard to ignore,” U.S. District Judge J. Paul Oetken said on Monday. “The idea of the business was to insure investors against the risk of criminal fraud, which is exactly what the defendant engaged in while raising money from investors in this very business.”
The one-hour sentencing was conducted via videoconference this morning, due to the Covid-19 global pandemic, about four months after David Correia pleaded guilty to two counts of a seven-count superseding indictment.
Correia established the business Fraud Guarantee with the Ukraine-born Lev Parnas, with whom he was first indicted in late 2019. The company is the same one Parnas used to hire Giuliani, then the personal attorney to President Donald Trump, in a relationship that has drawn scrutiny from federal prosecutors.
Judge Oetken, an Obama appointee, noted during the hearing Monday that Correia raked in a profit of $43,000 — just 2% of what was a $2.3 million investment fraud. Prosecutors say the bulk of the funds went to Parnas.
The sentence on one count of conspiring to commit wire fraud and one making false statements to the Federal Election Commission was below the guidelines range prosecutors had sought.
Assistant U.S. Attorney Nicolas Roos characterized Correia as “effectively the closer” in the Fraud Guarantee scheme, whereas Parnas was the “big ideas guy” who brought in the investor victims.
“He wasn’t some sidekick, he wasn’t an assistant to Parnas,” Roos said at the sentencing.
“He was an equal player in a criminal scheme and that demands a substantial sentence. They may have had different roles and profited different, but that doesn’t diminish the essential role that Correia played in a fraud scheme that resulted in significant losses.”
In addition to prison time, Oetken ordered restitution of $2.3 million and three years of supervised release.
Correia, a former golf pro residing in in West Palm Beach, Florida, said he feels “true remorse” for the conduct.
“These actions do not reflect what I want to be in life, and I will never repeat them,” the 45-year-old said, reading from a brief prepared statement at the sentencing.
His attorney William Harrington, a former SDNY corruption prosecutor, asked last week that Correia serve no prison time.
Federal prosecutors meanwhile said he deserved a sentence along the guidelines range of 33 to 41 months in prison for a fraud that cheated seven investors out of more than $2 million from 2012 through 2019.
“Correia played a critical role in the scheme by convincing investors that Fraud Guarantee was a legitimate and functioning business, when Correia knew that it was not operational and that the vast majority of the money investors put into the company was spent on purposes having nothing to do with Fraud Guarantee,” the government’s brief states.
The government said Corriea and Parnas actually invested “little, if any, money” in Fraud Guarantee, and instead diverted most of money to cash withdrawals that funded their lavish personal expenditures.
Correia’s lawyer noted that as part of his guilty plea, Correia agreed to forfeit the $43,650 he raised across the seven-year period.
This past Thursday, the Securities and Exchange Commission named Parnas and Correia as co-defendants federal civil complaint for misleading investors as part of the same Fraud Guarantee scheme.
Separately, New York federal prosecutors charged Parnas, alongside Belarus-born Igor Fruman and Ukrainian-born Andrey Kukushkin, in connection to a straw-donor scheme. The defendants allegedly used a shell company to donate $325,000 to a pro-Trump election committee and also raised money for former House Representative Pete Sessions of Texas as part of an ultimately successful effort to have the president remove Marie Yovanovitch as ambassador to Ukraine.
The indictment alleges that Fruman, Parnas, Correia and Kukushkin had planned to form recreational marijuana businesses that would be funded by a foreign national, cozying up to certain political officials so they could more easily get the necessary retail marijuana licenses in particular states, including Nevada and New York.
That trial, previously set for March 2021, has been delayed indefinitely.
The businessmen’s past connections to Giuliani did not net last-minute relief for any of four during Trump’s slew of pardons during the final week of his presidential term.