LAS VEGAS - - One of five defendants charged in August 2003 with participating in an elaborate corporate and securities fraud scheme in Nevada and elsewhere, pleaded guilty today before U.S. District Judge James C. Mahan, announced Daniel G. Bogden, United States Attorney for the District of Nevada.

SHAWN HACKMAN, age 35, a former attorney from Las Vegas, pleaded guilty to one count of Racketeering Conspiracy and agreed to a Criminal Forfeiture (of property obtained through Racketeering). He is facing up to 20 years in prison and a $250,000 fine when he appears before Judge Mahan for sentencing at 9:00 a.m. on May 10, 2004.

On August 7, 2003, SHAWN HACKMAN and three other attorneys, Sean Flanagan, Daniel Chapman, Herbert Jacobi, and stock transfer agent James Farrell, were charged in a 64-count Indictment. The Indictment alleges that between 1994 and 1999, they participated in a scheme involving the creation and sale of fraudulent shell corporations, commonly known in the securities industry as "box jobs." A few of the shell corporations involved in the scheme included Professional Mining Consultants, Inc., Dream Team International, Inc., and K-9 Protection, Inc. These shell corporations were fraudulent because promoters obtained hidden control of the entire supply of the public company's securities creating a secret monopoly in which control of the shell corporation and its stock was concealed by the use of nominee officers, directors and shareholders. When a company's securities are secretly "locked up" by the promoters, it is not possible for free-market trading to take place. The promoters are able to push stock prices up arbitrarily by simply restricting the supply, and once the price is at the desired level, the promoters and their associates "dump" their stock holdings on the market causing an immediate crash of the price of the stock. The public buyers caught in the middle lose most or all of their investment.

HACKMAN admitted in his plea agreement that, from at least July 1995 to about November 30, 2001, he and co-defendants Sean Flanagan, Daniel Chapman, Herbert Jacobi, James Farrell, and others known and unknown, were members of a criminal organization whose members engaged in securities fraud, money laundering, wire fraud, mail fraud, interstate transportation of stolen securities and receipt and sale of stolen securities for the purpose of enriching the members and deceiving the Securities and Exchange Commission.

In addition to the creation of shell corporations and installation of nominee officers and directors, HACKMAN admitted that the scheme involved among other things:

• fabrication of corporate records and stock records;

• mergers of the shell corporations with private companies,

• formation of companies in the Bahamas to cover up the fraud;

• Retaining of attorneys to issue false and misleading legal opinions indicating that the stocks of the shell corporations were freely tradable pursuant to federal securities laws, when in fact, they were not.

HACKMAN also admitted that another Las Vegas resident, Peter Berney, hired him and the other attorneys to issue false and misleading legal opinions, caused the nominees to be installed, and arranged for the mergers of the shell corporations with the private companies.

Investigators determined that Peter Berney and numerous other individuals were involved in the creation and sale of over 60 boxed companies between 1994 and 1999 for proceeds in excess of $35 million. Peter Berney, his wife Rebecca Berney, and another Las Vegas resident, Robert Potter, were indicted in July 2001 and charged with Money Laundering Conspiracy. Potter pleaded guilty and the charges against Rebecca Berney were dismissed following successful completion of a pretrial diversion program. Court information regarding Peter Berney is sealed.

HACKMAN is released on a personal recognizance bond pending sentencing.

Co-defendants Sean Flanagan, Daniel Chapman, Herbert Jacobi, and James Farrell are currently scheduled for trial on June 15, 2004.

This case is being investigated by Internal Revenue Service-Criminal Investigation and the FBI's Organized Crime Squad, and is being prosecuted by Assistant U.S. Attorney J. Gregory Damm.

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