FBI Makes Ponzi Arrest In California; Peter Jerald Frommer Faces Up To 233 Years Behind Bars If Convicted On All Counts

UPDATED 5:23 P.M. ET (U.S.A.) A California man has been arrested by the FBI and IRS criminal investigators in an alleged Ponzi scheme involving $12 million.

Peter Jerald Frommer was taken into custody this morning, after a federal grand jury returned a 17-count indictment yesterday.

Frommer, 34, formerly of Malibu, was charged with two counts of mail fraud, seven counts of wire fraud, five counts of money laundering and three counts of failing to file federal income-tax returns.

Prosecutors said he faced a maximum sentence of up to 233 years in prison if convicted on all counts.

“Frommer operated a bogus investment scheme under the names ‘Cap Exchange’ and ‘Cap X’ that purported to trade in surplus property of defunct companies,” prosecutors said. “[He] told numerous victims throughout the United States that he used commercial auction websites to purchase large lots of equipment for resale at higher prices.”

Between January 2004 and August 2006, prosecutors said, Frommer allegedly solicited “at least $12 million from victims by promising ‘guaranteed’ returns of 8 percent to 15 percent during cycles as short as six weeks.”

Investors were told Frommer would use their money “to buy the distressed assets for Cap X, and then would share profits from the subsequent sales,” prosecutors said.

“In addition to personal promissory notes, Frommer issued account statements that purported to show returns in the Cap X investment,” prosecutors said.

More than 50 investors were targeted in the scheme, including residents of California, Oregon, Virginia, Illinois and Massachusetts, prosecutors said.

Frommer did not purchase distressed assets with the victims’ money, prosecutors said.

“Instead, [he] allegedly misappropriated this money to maintain his lavish personal lifestyle and to make Ponzi payments to victims, while falsifying Cap X account statements to lull victims into believing that their money was safe and earning high returns,” prosecutors said.

It has been a busy week for Ponzi prosecutors in California.

Miguel Salazar, 36, of West Covina, pleaded guilty to mail fraud Tuesday. Prosecutors said Salazar ran a Ponzi scheme “that took nearly $700,000 from victims who thought they were investing in latex gloves, which were portrayed as being in high demand following the 9/11 terrorist attacks.”

Salazar’s former partner, Carlos Flores, 43, of Lakewood, pleaded guilty to mail fraud in December.

In other Ponzi news, an auction company is preparing to sell six vehicles linked to the alleged Trevor Cook/Pat Kiley Ponzi and financial-fraud scheme in Minnesota.

Among the items set to go up for bid Feb. 13 is a 1989 Rolls Royce Silver Spur linked to Cook. The Cook/Kiley scheme is alleged to be a fraud of at least $190 million.

In Utah, meanwhile, prosecutors said that Jeffrey Lane Mowen — accused in both a Ponzi scheme and a murder-for-hire plot in which potential Ponzi witnesses were to be killed — used Morse code as part of the murder plot.

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9 Responses to “FBI Makes Ponzi Arrest In California; Peter Jerald Frommer Faces Up To 233 Years Behind Bars If Convicted On All Counts”

  1. Is this the same bloke? From 2007:
    Better pass on the Bryce Pillaf
    http://www.aspentimes.com/article/20070203/NEWS/102030056

    ASPEN — Aspen police arrested a California man Friday on suspicion of bouncing more than $30,000 in checks to local baby sitters, his landlord and the Hotel Jerome, among others.

    But Peter Jerald Frommer, 31, a dotcom entrepreneur from Malibu, Calif., insisted last night everyone will be reimbursed. He said the oversight came as a result of a hectic move and multiple local bank accounts.

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  2. Looks like Peter Jerald Frommer has a fan base here:
    http://www.topix.com/forum/city/aspen-co/TCVTOAF450PURJ6OD
    The later pages suggest he is/was “selling” IPhones.

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  3. Hi Tony,

    Thanks for sharing those links. I see that the Topix discussion has 770 comments dating back to 2007.

    Regards,

    Patrick

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  4. It appears that someone called “Kili” set up and “organization” of some sort – comment #23. Then in comment #29 it is shown that “Kili” is not reporting accurately, reported misinformation, and constantly haranguing investigator’s and preventing them from doing their job. Then in #32, “Actually, Kili *already* has several pending lawsuits and a questionable criminal record to boot. ”

    Does “Kili” remind anyone of someone?

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  5. We are one of the victims purported. We have waited a long time for him to be held accountable. Some of the victims lost their homes and Peter Frommer kept lying and lying, producing fake statements and bank information. He stole the money plain and simple. FBI and IRS indictments are iron-clad, so we’re hoping there is some sort of restitution. When he was arrested in Aspen, we thought that was it…no, it went on and continued to con more people. When the judge ordered him to re-pay the victims in Aspen (he asked for a discount, pennies on the $), the judge said NO, you don’t get a discount for stealing. He re-paid those victims with more victims money. It’s taken 3+ long years to get him and now we’ll see (watch for the years of continuances).
    We are thrilled that he will now be held accountable for all the pain and suffering he handed down to his victims.

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  6. Thank God!!!! Finally….I can’t believe it’s finally here… an arrest!!! Far from conviction but this guy is scum and hurt a lot of us. Please prosecute this guy. Total dirt bag.

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  7. I am another victim of Mr Frommer. I would like to contact the FBI to offer any assistance I can provide. It is great news that this piece of human waste is (hopefully) going to be held accountable, at last.

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  8. I met peter on a Bulletin Board Software Program in 1991 When he was 15. he actually came into my office and scanned photos into my database. he was very smart and seemed like a good Kid. He invited me to his 21st birthday party at The Hardrock in Las vegas .He later rented my Condo in brentwood (Los Angeles) in 1996-7 and finally in 2006 & 7 bounced several checks and I lost $1400.00 on 4 tickets. I know that’s nothing, but I sure would like to know where a good Kid went wrong/bad??

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