November 14, 2003

OFFICE OF THE UNITED STATES ATTORNEY
SOUTHERN DISTRICT OF CALIFORNIA
San Diego, California

United States Attorney
Carol C. Lam

For Immediate Release

NEWS RELEASE SUMMARY

United States Attorney Carol C. Lam today announced the conviction in United States District Court in San Diego of William F. McCray and Paul Yates. A federal jury returned verdicts earlier today, after six weeks of trial and deliberation, convicting McCray on all counts presented, which consisted of nine counts of mail fraud, six counts of wire fraud, four counts of perjury, five counts of money laundering, one count of conspiracy to evade taxes and two counts of filing false tax returns. Yates was also convicted on all counts, which consisted of nine counts of mail fraud and six counts of wire fraud. The jury also found that $5.8 million and a 1998 Porsche Boxster were assets involved in McCray's money laundering convictions, the first step in having those assets forfeited to the United States as part of McCray's sentence. District Court Judge Napoleon A. Jones, Jr. presided over the trial and set sentencing for both defendants for February 9, 2004 at 8:00 a.m.

A federal grand jury returned a multicount Indictment in August 2000 charging William F. McCray, Paul Yates, and Tony D. Ortega with offenses arising from the operation of International Forex and Earthwise International -- two La Jolla-based entities that solicited the public to invest in a "managed currency account" that purportedly traded in foreign currencies.

Ortega previously pled guilty to conspiracy to evade taxes and is scheduled to be sentenced by Judge Jones on December 5, 2003, at 8:00 a.m.

According to the evidence presented at trial, McCray and Yates operated and participated in a scheme to defraud through International Forex and Earthwise International, and obtained more than $30 million from members of the public by falsely representing, among other things, that the companies had achieved annual returns for their managed currency accounts of 62% in 1993, 70% in 1994, 79% in 1995, 54% in 1996, 62% in 1997, and 52% in 1998; that investor funds were held in trust with the Bank of New York; that investor funds were insured; and that individual investors' accounts were earning substantial positive returns.

International Forex filed a voluntary petition for bankruptcy on October 1, 1999, in the United States Bankruptcy Court for the Southern District of California in San Diego. In testimony relating to those proceedings, McCray denied under oath any connection between International Forex and Earthwise International. The jury found that this testimony constituted perjury.

According to Assistant U.S. Attorneys Yesmin E. Saide and George C. Aguilar, who prosecuted the case, the evidence presented at trial also showed that McCray wired $5.8 million in investor money to an offshore account with the Bank of Bermuda, and used personal funds obtained from International Forex to purchase a condominium and, at that time, a new 1998 Porsche Boxster

In addition, the jury convicted McCray of conspiring to defraud the United States by concealing more than $1 million of McCray's income from the IRS during the years 1996 through 1998. McCray also was found guilty of two counts of filing a false tax return which did not declare much of this income.

According to the evidence presented at trial, defendant Yates was a leading account manager and salesperson for International Forex and the jury found that he participated in the scheme to defraud through misrepresentations to solicit funds and to keep investors from taking their money out of International Forex once questions arose regarding the legitimacy of its operations.

United States Attorney Lam stated, "The jury verdicts provide a measure of vindication for the hundreds of investors taken in by the defendants' and International Forex Ltd.'s fraudulent scheme. The financial hardships suffered by many of these victims show once again that these types of fraudulent schemes are very serious crimes. This office, together with the FBI, IRS and the U.S. Postal Service, which provided excellent investigative support in this case, is committed to future prosecutions of similar crimes."

Internal Revenue Service, Criminal Investigation Special Agent in Charge Denise L. Rubin said, "During the trial the evidence showed that Mr. McCray failed to report over $1,000,000 he took from investors in this foreign currency trading scheme. The jury verdict shows that individuals who intentionally understate their income will be held accountable. Internal Revenue Service, Criminal Investigation will continue to work closely with other agencies to aggressively investigate and prosecute individuals who take advantage of others for personal gain."

This case is the product of a joint investigation by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigation Division, the United States Postal Inspection Service, and the Office of the United States Trustee.

DEFENDANTS

William F. McCray
Paul Yates

SUMMARY OF CHARGES

McCray and Yates

Title 18, U.S.C., Sec. 1341 - Mail Fraud (twelve counts)
Maximum penalty per count: five years; fine of $250,000 (or twice the gain)

Title 18, U.S.C., Sec. 1343 - Wire Fraud (six counts)
Maximum penalty per count: five years; fine of $250,000 (or twice the gain)

McCray

Title 18, U.S.C., Sec. 1623 - Perjury (four counts)
Maximum penalty per count: five years; fine of $250,000

Title 18, U.S.C., Sec. 1956(a)(1)(A)(i) - Money laundering (two counts)
Maximum penalty per count: twenty years; fine of $500,000 (or twice the involved funds)

Title 18, U.S.C., Sec. 1957 - Money laundering (three counts)
Maximum penalty per count: ten years; fine of $250,000 (or twice the involved funds)

Title 26, U.S. C., 7206(1) - Filing false tax return (two counts)
Maximum penalty per count: three years; fine of $250,000

Title 18, U.S.C., Sec. 371 - Conspiracy (one count)
Maximum penalty: five years; fine of $250,000

AGENCIES

United States Postal Inspection Service
Internal Revenue Service, Criminal Investigation Division
Federal Bureau of Investigation
Office of the United States Trustee