Five co-defendants including Matthew Wheeler were charged in federal court with wire fraud, mail fraud, and conspiracy in violation of 18 U.S.C. §§1341 and 1349 for their involvement in a telemarketing scheme to defraud stock investors. Following an eight-week trial the jury found each defendant guilty on all counts. However, post-trial, the federal trial judge granted the judgments of acquittal based on insufficient evidence as to two defendants, Wheeler and Long. The three convicted defendants appealed their convictions while the government appealed the acquittal judgments.
The codefendants were charged with substantive mail and wire fraud and conspiracy to commit mail and wire fraud. It alleged that the defendants played various roles in a telemarking scheme that tricked investors into making stock purchases and misappropriated their money while operating out of two phone rooms. Certain codefendants worked as salespeople using an alias. Others had the role of managers, instructing salespersons on how to pitch a stock. Others played the role a loaders, who would play the role of high-level executives pushing the buyer to purchase “institutional” shares. Both phone rooms used and prepared written materials to aid their pitches to investors which contained inaccurate information but also included exaggerations and fabrications. Using the press releases and scripts, salespeople made false representations to potential investors, stating they were paid only in company stock, did not work for commissions, and that important businesspeople or celebrities were involved in the company they were pitching.