Case: 5:11-cr-00029-JBC Doc #: 56 Filed: 10/04/12 Page: 1 of 6 - Page ID#: 703

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY CENTRAL DIVISION LEXINGTON UNITED STATES OF AMERICA

V.

INDICTMENT NO. 5:11-CR-00029-JBC

JAMES NORMAN TUREK * * * * * GOVERNMENTS SENTENCING MEMORANDUM NOW COMES the United States of America, by and through the undersigned attorney, and submits the Governments Sentencing Memorandum with regard to the sentencing of James Turek scheduled for October 11, 2012.

I.

Summary of the Case On June 22, 2012, following a two-week trial, a jury convicted Turek of all

thirteen counts of the indictment: eight counts of securities fraud and five counts of filing false tax returns. The evidence at trial showed that Turek was the president, chief executive officer and director of Plasticon International, Inc. From 2004 to 2006, Turek caused Plasticon to issue billions of shares of stock to himself pursuant to false and backdated promissory notes. The promissory notes falsely claimed that Plasticon owed Turek more than

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$8 million as a result of loans he had made to the company. Turek frequently directed his secretary, Judy Paynter, to backdate by several years promissory notes payable to him. To evade SEC rules limiting the sale of stock by an officer or director, Turek feigned giving his Plasticon stock to various nominees including his children and his deceased aunt. Turek then caused the nominees to sell the stock into the market. As a result of these sales, Turek received more than $11.4 million personally and through LexReal Co, LLC, a shell company that he owned and controlled. To create investor demand for the stock that his nominees were selling, Turek issued press releases falsely stating that Plasticon was profitable and that it owned patents worth millions of dollars. Turek also falsely stated in an interview broadcast on the internet that he invested millions of dollars into Plasticon and that he had been working for nothing for three and a half years. Finally, Turek made false statements in Plasticons SEC filings in which he falsely stated that he had loaned the company millions of dollars when he had not. As a result of Tureks false statements, more than 8,500 investors purchased Plasticon stock and lost more than $18 million. Turek filed false tax returns for himself for the years 2003 through 2007. During three of those years, he reported no more than $36 in total income. For the entire five years, Turek failed to report more than $12 million in income on his tax returns.

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II.

Advisory Sentencing Guidelines Calculation Sentencing begins with a properly calculated advisory sentencing guidelines range.

Gall v. United States, 552 U.S. 38, 49 (2007). The government agrees with the Presentence Investigation Report (PSR) prepared by the United States Probation Office. In the PSR, the Probation Office determined that the defendant is an offense level 41, criminal history category I. As a result, the defendants advisory guidelines sentence is 324 to 405 months incarceration.

III.

Section 3553(a) Factors Call For Guidelines Sentence In imposing sentence in this matter, the Court should consider the need for the

sentence to reflect the seriousness of the offense, to promote respect for the law and to provide just punishment for the offense. 18 U.S.C. 3553(a)(2)(A). Pursuant to 18 U.S.C. 3553(a)(2)(B), the Court should also consider the imperative that the sentence in this case clearly and strongly deter others from violating the securities and tax laws of the United States. For years, Turek engaged in a massive fraud in which he swindled more than 8,500 people out of $18 million. The defendants misconduct had a devastating effect on his victims, some of whom lost their life savings because of the defendants scheme. Gene Guhne lost more than $500,000 from purchasing Plasticon stock in reliance on Tureks false statements. Turek also cheated Mr. Guhne personally by selling $50,000 of stock to him, taking Mr. Guhnes money, but not delivering the stock certificate for several
3

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months until after the stock was worthless. Steve Zaccarelli invested in Plasticon stock the money that he had saved from working two jobs for several years. He lost it all. Frank Meleshko, a disabled retiree, lost a sizeable portion of his retirement savings by investing in Plasticon stock. Chris Wildfoerster met with Turek in person and spoke to him several times on the telephone. Turek repeated the lies he made in the press releases by telling Mr. Wildfoerster that the company was profitable and owned patents worth millions of dollars. At Tureks recommendation, Mr. Wildfoerster purchased Plasticon stock and lost more than $100,000. These individuals and thousands of other investors all relied on the false statements that Turek made to swindle them into buying stock that his nominees were selling. The defendant stole not only the victims money but also violated their trust, particularly those whom the defendant personally conned out of their funds. Finally, the defendants crime has the grave consequence for the economy of undermining confidence by all investors in the public securities markets. While the sentence recommended by the guidelines is quite lengthy, it accurately accounts for the defendants position of trust as an officer of a public company, the immensity of the fraud in which the defendant engaged and the ruinous harm the defendant caused thousands of people. Accordingly, the government requests that the Court impose a sentence consistent with the advisory guidelines range in this case.

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IV.

Conclusion For the reasons stated above, the government requests that the Court sentence the

defendant to 324 months in prison. Respectfully submitted, KERRY B. HARVEY UNITED STATES ATTORNEY By: /s/ Kenneth C. Vert KENNETH C. VERT Trial Attorney U.S. Department of Justice Tax Division P.O. Box 972 Washington, DC 20044 Telephone: (202) 514-5150 Fax: (202) 514-8455 Email: Kenneth C. Vert@usdoj.gov

Dated: October 4, 2012

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CERTIFICATE OF SERVICE I hereby certify that a copy of the Governments Sentencing Memorandum was served via the Courts ECF system on October 4, 2012 on: /s/ Kenneth C. Vert KENNETH C. VERT