Promoting a “revolutionary” technology to turn dirt into gold landed three men from Utah and California in federal prison for stealing some $8 million from mostly older investors.
Two of those involved in the scam, Marc Andrew Tager, 55, of Sandy, and Jonathon Edward Shoucair, 69, of North Hills, California, met in prison while serving time for previous fraud convictions.
“This scam was pretty in depth and involved a high degree of deceit to pull off,” said Brian Maxwell, Utah Department of Commerce spokesman.
Tager, Shoucair and Matthew Earl Mangum, 51, of South Jordan, acted as leaders of the scheme and told investors they had created a plan to make money by extracting gold from dirt using a revolutionary process developed by Mangum, who was held out as an expert in metallurgy and the refining of precious metals.
They told people that they controlled a proprietary, breakthrough nanotechnology that used environmentally friendly means to pull microscopic particles of gold from dirt.
A fourth man, Kenneth Stephen Gross, 75, of Porter Ranch, California, cold-called potential investors through a telemarketing company and passed interested people on to Tager and Shoucair, according to federal prosecutors. Maxwell said Tager and Shoucair hid their criminal records from investors.
“From the very get-go, the scheme had deceit in it,” Maxwell said.
The men told investors their money would pay for space, equipment, materials and labor to develop Mangum’s process into a large scale, highly profitable business that would generate huge returns.
But prosecutors say the funds were only partially used to support the business, which was never profitable. Maxwell said the men extracted less than $30,000 in gold.
“These exorbitant return schemes with unproven processes are often an indicator of fraud,” Maxwell said. “This is just a different level of deceit than most investment scams that you would normally see.”
As part of the scam, Tager, Mangum and Shoucair formed Jersey Consulting and created a marketing website for the business.
On the website, they claimed that Jersey owned an 80-acre mining claim with a substantial amount of mineral rich ore and that their mining technology could achieve 20 times the yield of traditional mining at a fraction of the cost. They told investors that they would see 100% returns on their money in 12 months.
Since 2014, the men raised more than $8 million from about 140 investors, the majority of whom were over age 65. That averages out to just under $58,000 per investor. A dentist put several hundred thousand dollars after touring the processing facility, Maxwell said.
Prosecutors say Tager, Mangum and Shoucair spent $3 million on themselves and paid telemarketers, including Gross, another $2 million. The remainder covered “potentially legitimate” business expenses incurred by Jersey, according to prosecutors.
Last week, a federal judge sentenced Tager to 43 months prison for conspiracy to commit wire and mail fraud, money laundering, and possession of a firearm by a convicted felon. Tager was convicted of conspiracy to commit mail fraud in 2005 and sentenced to two years in prison.
Shoucair was sentenced to 72 months for conspiracy to commit wire and mail fraud and money laundering last October. He previously served time for running a $50 million telemarketing fraud scheme.
Mangum was sentenced last November to 48 months prison for conspiracy to commit wire fraud and money laundering.
Gross is serving 24 months probation for failing to disclose to federal authorities that he had knowledge that securities fraud was occurring.
Investigators from the Utah Division of Securities, FBI and the IRS worked on the case, which Maxwell said was not an easy fraud to uncover.
Contributing: Paul Nelson