FORMER LAKE JACKSON BUSINESSMAN PLEADS GUILTY TO DEFRAUDING INVESTORS

(HOUSTON, Texas) – A former stock broker has been convicted of mail fraud arising from a scheme to misappropriate millions of investors’ dollars, United States Attorney Don DeGabrielle announced today.  

Mark Douglas Montana, 41, formerly of Lake Jackson, Texas, pleaded guilty this morning to mail fraud before U.S. District Judge Keith P. Ellison. Per the terms of his plea agreement, the government and Montana have agreed that a 135-month prison sentence and restitution to the victims of the scheme as determined by the court is an appropriate disposition of the case. 

Montana did business as a registered representative associated with Crown Capital Securities, Ltd. through M & M Financial Inc., a corporation Montana created and controlled. At this morning’s hearing, Montana admitted that between 1999 and September 2004, he made false material representations to induce people to invest in securities through M & M Financial.  He further admitted to have misappropriated investors’ funds to pay personal expenses, such as the purchase of real estate and motor vehicles and to pay business expenses, including M & M Financial’s payroll. Montana also admitted he used investors’ funds to pay other investors who liquidated their accounts or who received periodic payments, which Montana termed “dividends” and “principal withdrawals.” 

As part of the scheme, Montana told investors he would pool funds to purchase blocks of securities at a discount, use his expertise in the securities markets to earn investors 10 to 15 percent annual returns and that their funds would be safe. He then prepared sham periodic “account statements,” which purported to summarize securities transactions for individual investors and to track the value of their investment portfolios. The sham statements were mailed to investors, leading them to believe that Montana was buying and selling securities and earning them returns as he had represented, when in fact he was not. The government believes Montana defrauded investors of nearly $10 million. 

Ellison has set sentencing for April 8, 2008. In the meantime, Montana will remain in custody on the federal charges and unrelated state charges.

Montana’s prosecution is the result of an investigation conducted by the Texas City office of the FBI and the Fort Worth Regional Office of the U.S. Securities and Exchange Commission.  Assistant U.S. Attorney Stephen L. Corso is prosecuting the case.