Two sentenced to over 30 years in prison in online pyramid scheme
A California man and his business partner were sentenced Thursday to more 30 years in prison for stealing millions of dollars from investors in a pyramid scheme and through the sales of phony stock.
Patrick M. Ryan, 35, of Canyon Lake, in Riverside County, and James A. Sweeney III, 64, of Afton, Tenn. were convicted in April 2011 of grand theft and securities fraud.
The men were found guilty of stealing $8.2 million from thousands of California investors through Riverside-based Big Co-op Inc., an online shopping hub. Consumers purchased a monthly membership to Big Co-op, which also operating as Ez2Win.biz, to receive discounted prices from retailers such as Sears, Target and Macy's.
In reality, individuals never received rebates or rewards, according to a statement from the California attorney general's office. Instead, the members earned money by getting new people to join and have them recruit new members.
Individuals paid Big Co-op between $19.95 and $99.95 in monthly membership fees. From 2005 to 2006, the company generated $1.2 million in revenues, according to the statement.
Additionally, Sweeney and Ryan sold phony stock in Big Co-op as a separate investment. The two men hosted seminars and meetings across the state, pitching the company as the future of online commerce.
Investors were told that the company was turning a profit and that an initial public offering was imminent. None of that was true, according to the statement.
But Sweeney and Ryan did sell shares for $0.50 to $5, and offered two-for-one deals to investors willing to pay cash. From 2005 to 2006, they took in more than $7 million from this scheme, the attorney general's office said.
With investors' cash, the two men lived lavish lifestyles. They purchased homes, country club memberships, luxury cars and ran up to $50,000 in monthly credit card bills.
The California Department of Corporations started receiving numerous complaints in October 2006. The case was turned over to the attorney general's office seven months later.
A Riverside County Superior Court judge sentenced Ryan to 31 years in prison and Sweeney to 33 years in prison. Each was ordered to pay $8.2 million in restitution.
-- Angel Jennings