Los Angeles CEO Sentences for 18 months Tax & Mail Fraud Telemarking Investment Scam

Los Angeles- Mark Johnson, 55, founder of Pacific Starr Fleet (PSF) in Los Angeles was sentenced to 18 months imprisonment, three years of supervised release and ordered to pay $179,100 in restitution.

On May 10, 2012, Mark Johnson pleaded guilty to one count each of tax fraud and mail fraud. According to the plea agreement, Johnson was the President and CEO of PSF, a business that claimed to offer private jet charter services to corporate and private customers through a membership purchased through PSF. However, according to court documents, Johnson rented office space and hired telemarketers to solicit investor money. The company did not own any assets, airplanes or hangar space. The company also did not have any customers and no memberships were ever sold.

Between December 28, 2006 and November 17, 2008, Mark Johnson induced more than ten investors to invest in PSF with promises that he knew he could not fulfill. Johnson was aware that telemarketers promised significant returns on investments, such as a 250% in three months and a 400% return in six months.

Johnson admitted that he induced one investor to invest in PSF for $500. In exchange Johnson promised that after PSF was offered for sale publically through an initial public offering (IPO); Johnson would pay the investor $25,000 for a portion of the investor’s shares. The company never went public and only a small portion of the investor funds were used for business expenses, but were used to pay Johnson’s personal expenses instead.

Johnson further admitted that he was advised by an attorney and others knowledgeable about IPOs of the costs and records needed for an IPO. Johnson admitted that he knew that he did not possess the accounting records or the funds for an IPO of Pacific Starr Fleet. The total loss to investors is $179,100.

Johnson also admitted that he failed to collect and pay over taxes for employees and independent contractors of PSF. As part of the agreement, Johnson signed a closing agreement with the IRS, permitting the IRS to assess and collect the total tax due to the IRS for employment taxes between third quarter 2006 through third quarter 2007, totaling $9,563.40.

The investigation of Mark Johnson was conducted by the IRS – Criminal Investigation and Federal Bureau of Investigation and prosecuted by the U.S. Attorney’s Office for the Central District of California in Los Angeles.