Massachusetts Man Pleads Guilty to $6.9 Million Fraud Scheme

James W. Massaro, 70, of Boxford, Massachusetts, pled guilty today to engaging in a fraudulent foreign investment scheme that defrauded at least 20 victims of more than $6.9 million.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; and Daniel Cortez, Inspector in Charge of the Washington Division of the United States Postal Inspection Service, made the announcement after the plea was accepted by United States District Judge Leonie M. Brinkema.

Massaro pled guilty to one count of conspiracy to commit wire fraud. He faces a maximum penalty of 20 years in prison when he is sentenced on September 21, 2012.

According to a statement of facts filed with his plea agreement, Massaro claimed to be the president of a business called Tracten Corporation, and he admitted that from September 2005 through April 2008, he conspired with others to engage in a fraudulent scheme that required investors to pay a fee that would be used to secure large letters of credit through European financial institutions. Investors were told the initial payment was a commitment fee necessary to secure a multi-million-dollar letter of credit and that they would receive a percentage monthly return on the total amount of the letter of credit. Each investor entered into an escrow agreement with Tracten, which stated that the fee would be wired to an escrow attorney, who would, in turn, disburse the fee to Tracten after the escrow attorney received a commitment letter from the foreign bank on behalf of the investor.

Massaro admitted that in 2005, he and another co-conspirator made multiple trips to Rome, Italy, to meet with bank officials to pitch the letter of credit program. Despite the bank’s refusal to participate, the conspirators secured an Internet domain name to set up an e-mail account that would appear to come from a bank representative and created fraudulent bank letterhead that also appeared to come from the bank. Massaro and others used the e-mail account and letterhead to forge commitment letters purporting to be from bank officials that would be provided to escrow attorneys. Pursuant to the escrow agreement, the escrow attorneys relied on these fraudulent commitment letters to disburse the fees to Massaro.

According to the plea agreement, Massaro defrauded at least 20 investors who had together paid $6,936,985 in fees as part of the letter of commitment investment program.

The investigation was conducted by FBI’s Washington Field Office and the U.S. Postal Inspection Service’s Washington Division. Assistant U.S. Attorneys Timothy D. Belevetz and Charles F. Connolly are prosecuting the case on behalf of the United States.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae.