FORMER MAXIMUM DYNAMICS PRINCIPAL IS SENTENCED TO 60 MONTHS IN FEDERAL PRISON FOR CONSPIRACY TO DEFRAUD THE IRS AND SEC
DENVER – Eric Richfield Majors, age 39, formerly of Colorado Springs, Colorado, was sentenced today by U.S. District Court Judge John L. Kane to serve 60 months (5 years) in federal prison for conspiracy to defraud the Internal Revenue Service (“IRS”) and the U.S. Securities and Exchange Commission (SEC), United States Attorney David Gaouette, Special Agent in Charge of the IRS Criminal Investigation for the Denver Field Office Christopher M. Sigerson, and Denver Postal Inspector in Charge Shawn S. Tiller, announced. Following his prison term, Majors is to serve 3 years on supervised release. Majors was also ordered to pay $127,239 in restitution to company shareholders-investors, who reported that they were victims of the fraud. He was also ordered to pay $39,301 in restitution to the IRS. Majors was ordered to report to a facility designated by the U.S. Bureau of Prisons by August 2, 2010.
Joshua Neale Wolcott, a co-defendant, is scheduled to be sentenced on April 1, 2010, at 9:00 a.m. also by Judge Kane.
Eric Richfield Majors was first charged by Criminal Complaint on October 12, 2007. He was indicted by a federal grand jury in Denver on November 28, 2007. He was later charged by Information which resulted in a guilty plea before Judge Kane on April 17, 2009. He was sentenced today, March 19, 2010.
According to the facts contained in the defendant’s plea agreement, Maximum Dynamics, a company formerly based in Colorado Springs, Colorado, became a publicly-traded company subject to SEC reporting in August 2002. The stock was traded on the OTC Bulletin Board, an electronic stock quotation system typically used to facilitate the trading of stock of small capitalized companies. Maximum was described in its initial SEC filings as a development stage company offering customized computer software for financial institutions. Maximum later described itself as a project development company involved with various developmental technology projects, including a wireless tracking system and a wireless mobile point-of-sales terminal. The company moved a significant portion of its operations to South Africa in 2003. The company represented that it had offices in Mexico and in other foreign countries through business partners.
Between August 2000 and April 2005, defendant Eric Majors and co-defendant Joshua Wolcott conspired to cause materially false information to be included in Maximum Dynamics’ quarterly and annual statements and other reports and documents filed with the SEC. Majors and Wolcott used the names and identities of unwitting Mexican nationals and shell companies to issue stock as compensation for consulting services purportedly done for the company. Majors and Wolcott maintained control of this stock, sold the stock and used the proceeds for their own enrichment and purposes, including as a source of financing for Maximum.
Majors and Wolcott sold Maximum Dynamics stock issued to Mexican nominees on the open market, through brokerage accounts opened in the names of the nominees, to individual investors or entities through private sales arranged by, at the direction or on behalf of Majors and/or Wolcott. They would then use the proceeds of the stock sales for their own personal use and personal expenses, to make payments to relatives and pay for their personal expenses, to pay Maximum employees and bona fide Maximum consultants for their work for Maximum or for other expenses incurred in connection with developing the business of Maximum.
The IRS was unaware that the stock sales were attributable either to the defendant Majors or co-defendant Wolcott or that either defendant was responsible for the taxes owed on any gains from the sales as the stock was held in nominee names. As a result of the net proceeds realized by the defendants from the sale of Maximum and non-Maximum stock that was sold in the names of the Mexican nominees, the government calculates the unpaid tax of $402,004, based on the realized gains of $1,262,258.
“This sentence reflects the importance of holding individuals accountable for fraud committed against the public and ensures public trust in the mail,” said Postal Inspector in Charge Shawn Tiller. “This is a good example of a collaborative effort with our law enforcement partners to protect the American public.”
“This sentencing sends a clear message; executives who misuse their positions of trust within their corporations, to defraud both shareholders and American taxpayers will be held accountable,” said Christopher M. Sigerson, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
The case was investigated by the U.S. Postal Inspection Service and IRS Criminal Investigation, based on a criminal referral from the SEC, through its Denver Regional Office.
This case was prosecuted by Assistant U.S. Attorney Kenneth Harmon.
#####
