Santa Barbara man pleads guilty in $12 million Ponzi scheme

November 23, 2010

Peter Jerald Frommer

A Santa Barbara  man accused of defrauding more than 50 investors in a $12 million Ponzi scheme pleaded guilty Tuesday to charges related to federal mail and wire fraud charges.

Frommer faced a statutory maximum sentence of 233 years in prison if found guilty on the 17 counts in the indictment.

In exchange for today’s guilty plea, prosecutors agreed to not seek more than 33 years in federal prison when Peter Jerald Frommer, 35, is sentenced on March 10, 2011 by United States District Judge George H. Wu.

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

From January 2004 until August 2006, Frommer solicited at least $12 million from victims by promising “guaranteed” returns of 8 percent to 15 percent during cycles as short as six weeks. Frommer claimed that he would use victims’ money to buy the distressed assets for Cap X, and then would share profits from the subsequent sales.

However, Frommer did not purchase distressed assets with the victims’ money. Instead, Frommer 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.

The investigation into Frommer was conducted by the Federal Bureau of Investigation and IRS-Criminal Investigation.

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Let me see if I understand this…

Guth gets 12 years (most likely will only serve six years) and Yaguda only gets eight years ( most likely will only serve four years)… for taking $343 million of investors money… so why the difference in sentences…?

And by the way… as an investor with EFI… to date I have received absolutely zero from my stolen funds…

Probably because the lawyers for Guth (crooks themselves, remember when, a year or so ago, they claimed Guth and her little boy were completely innocent?) and the other shysters running the scene since then are sucking up all the dough. None of them give a damn for you. Too bad, the DA did nothing for the victims, leaving them hanging in the wind the whole time.

As for Hurst victims we have seen nothing from the DA or the Feds, nothing…

Frommer 12 Million Ponzi, Gearhart 100 Million Ponzi, Madoff 50 Billion Ponzi.

Trust me, this sort of thing has been going on since the 1970s, and there are still a lot of them out there! They should all serve 3 years in the worst foreign prison, then bought back to the US for a humane execution.

Why humane?

More precedent setting convictions, where is our DA? Miller, Gearhart and friends still walking around without being charged.

Local prosecutors seem content to tackle cases such as the one today involving bail-bond agents. Cases you mention (Miller, Gearhart, et. al.) are, most likely, beyond their expertise to charge and prosecute.

Boy if he was looking at a potential of 233 years for 12 mil, I wonder how much Jay Miller is looking at for 90 mil?? Oh and Kelly G??

One thing about Federal if you receive 33 years you serve that entire sentence unlike state crimes where you get time off for good behavior,ouch!

Miller and Brard stole or lost over $125 million.

Lets hope he gets the full 33 years. At least its federal and not funded by the state. I hope he gets a place worse than the Lompoc country club to serve his time as well