Morristown man charged with federal wire fraud and conspiracy in $19 million fraud case
BUFFALO — A Morristown man has been indicted on multiple felony counts by a federal grand jury.
According to U.S. Attorney Trini E. Ross, Darin R. Pastor, 51, has been indicted with conspiracy to commit wire fraud and securities fraud, securities fraud, and wire fraud.The charges carry a maximum penalty of 25 years in prison, according to a Department of Justice press release.
Pastor is also charged with engaging in monetary transactions with criminally derived property and conspiracy to defraud the United States, the release states.
According to Assistant U.S. Attorney Paul E. Bonanno, who is handling the case, Pastor obtained ownership and control of a publicly traded company named Creative App Solutions, Inc. in Sept. 2013.
Creative App Solutions, Inc.’s stocks were registered with the United States Securities and Exchange Commission, according to the press release.
According to the release, from Sept. 2013, through March 2017, approximately 95 investors purchased Capstone stock in private placement offerings for approximately $19 million.
The release goes on further, saying Pastor and his partner Halford W. Johnson, 59, who was also indicted on the same charges, “fraudulently represented to investors and potential investors that Pastor had substantial personal wealth, and that Capstone was engaged in lucrative investments, such as gold, equity, and livestock deals, which would generate enormous profits for the investors.”
Pastor and Johnson allegedly “maintained an online Wikipedia page for Pastor that misrepresented his net worth, and in soliciting investments in Capstone, encouraged potential investors to research Pastor online,” according to the release.
According to the Justice Department, Pastor actually had a negligible net worth and was millions of dollars in debt.
Justice Department officials say millions of dollars were used to pay for Pastor’s personal expenses and to fund a lavish lifestyle for himself and his wife, which included:
• $1.5 million to purchase a house in Clarence, New York;
• $738,000 to purchase a house in Florida for a relative of Pastor;
• $294,640 for jewelry;
• $118,000 for Pastor’s 2013 destination wedding in St. Barts;
• $95,000 for furniture for Pastor’s rented home in California;
• $57,000 for clothing from a high-end men’s clothing store in Amherst, NY;
• $56,000 for child support payments to Pastor’s ex-wife;
• $55,000 for tooth veneers for Pastor and his wife; and
• $52,000 for motor vehicles.
Officials also say that in April 2017 Capstone offered to buy back shares of Capstone stock from its investors. Pastor and Johnson represented to investors that if they sold their Capstone shares back to the company, Capstone would pay them at least four times the amount the investors had paid for the stock by December 31, 2017.
According to officials, 94 investors accepted the offer and returned their shares to the company. None of the investors who sold their stocks back received payment from Capstone by the December 31, 2017 deadline.
Between Feb. and April 2018, Capstone made partial payments to investors who never received the full amounts promised from the stock buyback agreements.
The indictment comes following an investigation by the Federal Bureau of Investigation, under the direction of Special Agent-in-Charge Stephen Belongia and the and the Internal Revenue Service, Criminal Investigation Division, under the direction of Special Agent-In-Charge Thomas Fattorusso.
Pastor and Johnson were arraigned by U.S. Magistrate Judge Michael J. Roemer and released on conditions.