08-12-04 -- DaCosta, Patrick & Clavone -- Indictment -- News Release

Camden County Couple Indicted for Investment Scams

NEWARK - A New Jersey couple was charged in a 14-count Indictment today with defrauding the clients of Ultimate Chasers International (UCI), the couple's Jersey City-based unincorporated company, U.S. Attorney Christopher J. Christie announced.

Patrick DaCosta, 45, and Clavone DaCosta, 40, were charged with one count of conspiracy to commit mail and wire fraud, and 13 specific counts of mail and wire fraud in connection with the promotion and sale of two bogus investment programs through UCI, entitled: the Federal Reserve Program and Ultimate Chasers International Real Estate Program. Acting through UCI, according to the Indictment, the DaCostas defrauded at least five investors in Virginia, California, Florida and Michigan.

The DaCostas, who formerly resided in Jersey City, were arrested this morning by Special Agents of the FBI at their home in Gloucester Township, Camden County. The couple was scheduled to make initial appearances today at 11:30 a.m. before U.S. Magistrate Judge Joel B. Rosen in Camden.

The conspiracy count carries a maximum penalty of five years in prison and a $250,000 fine. fine. Twelve of the mail and wire fraud counts carry a maximum penalty of five years in prison and a $250,000 fine; one of those counts carries a maxiumum penalty of 20 years in prison and a $250,000 fine.

The Indictment charges that from at least about November 1997 to about February 2003 the DaCostas engaged in a scheme to defraud the clients of UCI, a company controlled by Patrick DaCosta. Patrick and Clavone DaCosta are alleged to have bilked investors out of at least $1.2 million.

The couple allegedly induced unsuspecting investors to invest in UCI's fraudulent Federal Reserve and Real Estate Programs by means of false and fraudulent representations, and then embezzled the invested funds. They also conspired to conceal, disguise, and forestall discovery of the fraudulent scheme by, among other things, providing investors with sham monthly account statements.

According to the Indictment, in order to solicit funds from investors, Patrick and Clavone DaCosta made numerous false and misleading statements, directly and through others, about UCI's Federal Reserve Program and Real Estate Program, the manner in which the programs generated returns for investors, the use of the investors' funds, and the promised rates of return.

For instance, in order to induce investors to invest in the Federal Reserve Program, Patrick and Clavone DaCosta fraudulently promised an extraordinary 1,200 percent rate of return every three weeks. They also fraudulently represented to investors, among other things, that: UCI and Patrick DaCosta had expertise and knowledge as investment consultants;

that the Federal Reserve Program involved a sophisticated bank note trading program, where UCI pooled investors' money to acquire a "Long Term Note,"or bank debt instrument, worth hundreds of millions of dollars, for a fraction of its value; that the program operated through an unknown mechanism of the U.S. Federal Reserve Bank; and that the discounted Long Term Notes were then sold into a "market," for a significant profit.

Through solicitation documents, Patrick and Clavone DaCosta fraudulently represented to investors, among other things, that in one year's time an investment of $2 million, employing UCI's type of bank-note trading program, could grow to $20 million.

According to the Indictment, defendants knew that the Federal Reserve Program did not exist and that they and UCI had no expertise in bank-note trading programs.

The description of the Federal Reserve Program offered to investors was typical of a confidence scheme commonly known as a "Prime Bank" fraud.

To induce investors to participate in the Real Estate Program, the DaCostas are alleged to have falsely represented to investors that, among other things: UCI and Patrick DaCosta had specialized knowledge, experience, and a successful track record investing in real estate; that the Real Estate Program primarily involved UCI's purchase and immediate resale of distressed real estate, often in pre-foreclosure, foreclosure, or in disrepair, and generally in units of 50 to 100 homes or more; that UCI acquired blocks of homes through auctions, New Jersey banks, property investors, and governmental agencies and programs; that UCI had a large database of pre-qualified buyers who would purchase the homes from UCI; that UCI had an experienced staff of managers, construction workers, and property inspectors; that the exclusive use of the investors' money was for real estate investing.

UCI guaranteed investors' initial capital investment against loss and guaranteed a rate of return of 25 percent per month for the one-year term of the agreement; and UCI would provide accurate monthly statements to the investors.

To conceal the fraud and lull investors, Patrick and Clavone DaCosta, among other things, provided some investors with bogus monthly account statements containing fabricated monthly investment returns. For example, Patrick and Clavone DaCosta falsely reported that an investor's initial investment of $10,000 made in November 1999 had grown to $40,000 by the end of December 1999.

In total, Patrick and Clavone DaCostas' fraudulent UCI Real Estate and Federal Reserve Programs yielded at least $1.2 million in investor deposits, which they subsequently embezzled.

Christie credited Special Agents of the FBI, under the direction of Special Agent in Charge Joseph Billy, Jr., with developing the case against Patrick and Clavone DaCosta. Christie also credited Postal Inspectors with the U.S. Postal Inspection Service, under the direction of Postal Inspector in Charge Martin D. Phanco, and thanked the New Jersey Bureau of Securities for its work in the case.

The Government is represented by Assistant U.S. Attorney Wolfe of the U.S. Attorney's Securities and Healthcare Fraud Unit in Newark.

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Defense Counsel for Patrick Dacosta: Chester M. Keller, Esq., Assistant Federal Defender