A Florida federal jury convicted two Florida men and a woman for carrying out what authorities described as an $80 million Ponzi scheme that duped hundreds of victims through so-called "virtual concierge" machines. Joseph Signore, his estranged wife Laura Grande-Signore, and Paul Schumack were each convicted on various charges after three days of jury deliberations. Joseph Signore was convicted of 34 various fraud counts, while Schumack was convicted of 23 fraud counts. Signore's estranged wife, Laura Grande-Signore, was convicted of seven fraud counts but was also found not guilty of one fraud charge. U.S. District Judge Daniel T.K. Hurley ordered Joseph Signore and Schumack taken immediately into custody while allowing Grande-Signore to remain free under house arrest pending sentencing.
According to authorities, Signore and Schumack solicited potential investors to participate in JCS Enterprises' ("JCS") Virtual Concierge program, which involved the purchase of a virtual concierge machines ("VCM") through a one-time fee ranging from $2,600 to $4,500 per VCM. The VCM, which resembles an ATM, is a free-standing or wall-mounted machine placed in various businesses that purportedly allowed the advertisement of products or services and even the ability to print tickets or coupons. Potential investors were told that the VCMs generated substantial returns, which in turn would allow the payment of annual returns to investors ranging from 80% to 120%. In addition, investors were provided with the location of the VCMs they had purportedly purchased and even given the ability to track the VCM activity online.
Investors were solicited in several ways, including several websites controlled by the entities and through videos posted on popular video-sharing website YouTube. The videos promised that the VCM would "generate income for years," and promised that a $3,500 investment could produce "huge returns." Potential investors also received emails from Schumack, who touted his graduation from West Point Military Academy in 1979 and whose email signature also featured a Bible passage intended to create a false sense of security for investors.
However, authorities allege that the outsized returns touted by the defendants were the result of a Ponzi scheme. According to the SEC, the production of VCMs was not close to the amount of VCMs purportedly sold to investors, and the guaranteed returns were "a farce." Instead, investor funds were commingled and used for a variety of unauthorized purposes, including the unauthorized transfer of more than $2 million to Signore and his family. An additional $56,000 in investor funds were used for expenses including restaurants, stores, and a tanning salon. Finally, approximately $4 million in investor funds were transferred to an unrelated account from which Schumack and others allegedly made more than 100 cash withdrawals of nearly $5 million.
However, while JCS pre-sold over 22,500 of the VCMs, less than 200 of the units were ever manufactured and only 82 were installed as promised. Rather than generate the substantial returns promised to investors, JCS realized approximately $21,000 in revenues from those installed VCMs. Authorities filed civil and criminal charges against the defendants in May 2014.
The convictions come nearly nine months after the fourth defendant, Craig Hipp, was convicted on one count each of conspiracy to commit mail and wire fraud, mail fraud and wire fraud. Attorneys for each of the defendants have indicated they plan to appeal the verdict, with Signore's attorney indicating that his client should have been tried in a separate trial from the other defendants.
Sentencing has not yet been scheduled, but post-trial motions are due January 25, 2016. Each of the defendants potentially faces decades in federal prison.