David Aldrich, 43, of San Diego, pleaded guilty today to orchestrating an $8.5 million securities fraud scheme through PLCMGMT LLC, doing business as Prometheus, a litigation marketing company that preyed on investors with false promises of massive returns and instant liquidity.
Aldrich admitted in federal court that he conspired with James Catipay, who pleaded guilty on October 26, 2016, to defrauding approximately 200 investors by fabricating claims that their investments were secured by enforceable liens and could be redeemed on demand. In reality, the funds were unsecured, high-risk, and no credible source existed to cover redemptions or returns.
Launched in 2013, Prometheus claimed it would use investor money to fund marketing campaigns aimed at recruiting plaintiffs for tort lawsuits against pharmaceutical and medical device manufacturers. The scheme promised returns of 100% to 300%, depending on investment size and duration, claiming that settlements were already in escrow and ready to pay out—lies Aldrich now admits were central to the fraud.
Marketing materials distributed by Aldrich and Catipay falsely claimed that 100% of investor funds were secured and that plaintiffs’ cases were pre-settled with funds in escrow. The truth: only 1% of cases had settled, most hadn’t even entered litigation, and investor redemptions were routinely denied. Less than $300,000 of the $8.5 million raised was ever returned.
The fallout devastated hundreds, many of them retirees who lost their life savings. U.S. Attorney Laura E. Duffy warned the public to remain skeptical of unverified investments offering sky-high returns. Meanwhile, the Securities and Exchange Commission has filed a civil case (SEC v. PLCMGMT LLC, et al., LACV16-02594-TJH) and a federal receiver has been appointed to seize Prometheus assets.
Aldrich is scheduled for sentencing before District Judge John A. Houston on February 13, 2017. FBI Special Agent in Charge Eric S. Birnbaum emphasized the agency’s commitment to exposing fraud: “Today’s conviction is a reminder of the financial perils associated with high yield investment fraud scams.” Victims are urged to contact the FBI at 1-800-CALL-FBI.
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Key Facts
- State: California
- Agency: DOJ USAO
- Category: Fraud & Financial Crimes
- Source: Official Source ↗
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