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February 28, 2019

Michael Liberty charged with multimillion-dollar investment fraud

Photo / Mozido Michael A. Liberty, a well-known former Portland developer and entrepreneur from Gray who now lives in Florida, was indicted Wednesday on charges of participating with another man in a purported multimillion-dollar scheme involving investments in a startup financial technology company, Mozido Inc.

Michael Liberty, a Gray native and former Portland developer, was charged with another man in an indictment filed Wednesday for their alleged roles in a purported multimillion-dollar scheme involving investments in a startup financial technology company, Mozido Inc.

Liberty, 58, now of Windermere, Fla., and Paul E. Hess, 63, of Braintree, Mass., were each charged in an indictment filed in federal court in Portland with one count of conspiracy to commit wire fraud, four counts of wire fraud and one count of securities fraud, according to a news release sent to Mainebiz by U.S. Attorney Halsey B. Frank of the District of Maine.

Liberty also was charged with one count of conspiracy to commit money laundering and three counts of money laundering.

The indictment was announced Wednesday by Frank, Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, special-agent-in-charge Joseph Bonavolonta of the FBI’s Boston field office and special-agent-in-charge Kristina O’Connell of the IRS’s criminal investigation office in Boston.

Liberty was charged almost a year ago in a lawsuit filed in Portland by the Securities and Exchange Commission alleging that he, along with others, induced investors to buy unregistered interests in shell companies he controlled that supposedly owned transferable interests in the fintech startup Mozido.

Others alleged to be involved are Liberty’s wife, Brittany Liberty, his attorney George Marcus, his cousin Richard Liberty, and Hess, described as his cousin's friend.

The SEC alleged in a news release last year that Liberty and his accomplices stole most of the more than $48 million raised "to fund a lavish lifestyle that included private jet flights, multi-million dollar residences, expensive cars and movie production ventures.”

A statement issued last year by Jay Dubow, attorney with Pepper Hamilton LLP of Philadelphia, on behalf of Michael Liberty, called the SEC’s complaint groundless and said that Liberty would “vigorously defend himself through the court system.” 

The Portland Press Herald reported that Liberty’s Portland-based lawyer, Thimi R. Mina, said his client “adamantly denies the criminal charges,” and looks forward to being exonerated.

“That this criminal action is an unnecessary overreach by the federal government is underscored by the fact that there is already a civil lawsuit brought by the Securities & Exchange Commission in the District of Maine, which is the proper forum to address these allegations,” Mina said in a statement reported by the Press Herald. 

Here’s what Wednesday’s indictment alleges

The indictment announced Wednesday alleges that, beginning in 2010, Liberty and Hess solicited investments in Mozido, a privately held financial technology start-up company that offered users an ability to make payments using their mobile phones.

Liberty and Hess allegedly raised millions of dollars from investors, telling them that their money would be used to fund Mozido’s business operations and that Hess was not being paid to raise the money, according to the news release from the U.S. Attorney’s Office in Maine.

The indictment alleges that a substantial amount of the money did not go to Mozido, that a portion of the money was diverted to pay Liberty’s personal expenses and that Hess received commissions and other payments in return for the money he raised from investors.

Those charged face up to 20 years in prison and a fine of the greater of $250,000 or twice the gain or loss on the wire fraud charges and up to 20 years in prison and a $5 million fine on the securities fraud charge, according to the U.S. Attorney’s Office.

Liberty faces up to 10 years in prison and a fine of the greater of $250,000 or twice the amount of criminally derived property involved in the transactions on the money laundering charges.

The office said that the charges in the indictment are allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The FBI’s Portland Resident Agency and IRS-CI are investigating the case.

Trial Attorneys Michelle Pascucci and Matthew Sullivan of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Donald Clark of the District of Maine are prosecuting the case.

The fraud section plays a pivotal role in the Department of Justice’s fight against white-collar crime around the country, according to the news release.

The office said individuals who believe they may be a victim in this case should contact the Victim Witness Services Unit of the U.S. Attorney’s Office for the District of Maine at 207-780-3257.

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