Former Owner Pleads Guilty to $7M Bond Scheme
A former Queenstown, Maryland, resident has pleaded guilty to securities fraud and filing a false tax return, according to a guilty plea announced by U.S. Attorney Rod J. Rosenstein of the District of Maryland.
Wilfred T. Azar III, 53, became the president and majority owner of Empire Corporation in 1999 and exercised complete control over the operations of Empire. Empire Corporation owned Empire Towers Corporation, which owned the 10-story Empire Towers office building in Glen Burnie, Maryland.
According to Azar’s plea agreement, by January 2006, Empire Corporation could no longer pay its expenses and was effectively insolvent. By 2007, Empire Towers Corporation had exhausted its lines of credit from lending institutions.
Between January 2006 and April 2010, Azar caused Empire Corporation to sell bonds to more than 50 individual investors for more than $7 million. However, the bonds were not registered with either the U.S. Securities and Exchange Commission (SEC) or the state of Maryland.
Azar falsely told investors that Empire Corporation was in good financial health and that the company generated enough revenue to pay the promised 10 percent annual rate of return. He also falsely represented that the money invested would be used for a specific renovation project or other capital improvement at the Empire Towers office building.
However, Azar failed to inform investors that he used most of the money raised from previous bond sales for his own personal purposes. He diverted millions of dollars of proceeds from the bond sales to his own bank account and to the bank accounts of other companies that he controlled. Azar used the bond proceeds to purchase a $100,000 Aston Martin luxury automobile, pay the $3,000 monthly mortgage on his primary residence, and pay $51,000 to an Azar trust.
Azar faces a statutory maximum sentence of 20 years in prison for securities fraud, and a maximum of three years in prison for filing a false tax return. U.S. District Judge William D. Quarles Jr. has scheduled sentencing for Aug. 12 at 10:00 a.m.
The SEC has also filed a complaint against Azar and another individual in connection with the scheme, and that case is pending.
Key Facts
- State: Maryland
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release ↗
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