Ex-head of California energy wholesaler sentenced for scam
FORT LAUDERDALE, Fla. - - The former president of an electricity wholesaler faces up to five years in prison for his part in a scam that prosecutors said capitalized on the California energy crisis by offering wildly exaggerated returns for an investment in the company.
E. Douglas Mitchell, president of the California-based PowerSource, was convicted Tuesday of conspiracy to commit wire fraud and mail fraud. He'll be sentenced July 16.
Prosecutors called PowerSource a "worthless business" supported by telemarketers, millions of spam e-mail messages a week and a website telling potential investors they would reap up to 100-per-cent returns on a $10,000 investment in the company.
Investigators said for each $10,000 investment, $4,500 went to telemarketing, $3,500 to PowerSource and $1,600 to associated companies, leaving $400 in working capital.
In late 1998, PowerSource had $600 in the bank, said court records; a year later, it was in default on a $210,000 loan.
Mitchell, of San Marcos, Calif., was the last remaining defendant in the case. Six others involved in the scheme pleaded guilty and were sentenced to prison terms ranging from one to five years.
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