Thaindian News

LOS ANGELES, CALIFORNIA (BNO NEWS) – The promoter of the bogus invested scheme “Cap Exchange”, or “Cap X”, was taken into custody on federal mail and wire fraud charges for running a Ponzi scheme which raised at least $12 million, prosecutors said on Friday.

Peter Frommer, 34, a former Malibu resident who is currently based in Carpenteria, surrendered after being indicted on 17 counts. He was indicted on two counts of mail fraud, seven counts of wire fraud, five counts of money laundering and three counts of of failing to file federal income tax returns for the tax years 2004 through 2006.

Frommer, through his bogus investment scheme “Cap X”, purported to trade in surplus property of defunct companies. He told more than 50 victims across the United States that he used commercial auction websites to purchase large lots of equipment to resale at higher prices.

During the period of January 2006 to August 2006, Frommer allegedly received at least $12 million from investor and promised them “guaranteed” returns of 8 to 15 percent within six weeks. He claimed that he would use the victim’s money to buy the distressed assets of his company and later he would share the profits from the sales.

The Federal Grand Jury of Los Angeles alleges that Frommer used the money to maintain his lavish personal lifestyle and to make Ponzi payments to victims instead of purchasing the distressed assets.

If convicted on all counts he faces a maximum sentence of 233 years in prison.