U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20354 / October 31, 2007
United States v. IDPM Group, Inc., Craig H. Reinhard and Debra R. Bzik, 06-997 (E.D. Pa.)
IDPM Group Owners Criminally Charged With Mail Fraud And Making False Statements to the Securities and Exchange CommissionThe Securities and Exchange Commission ("Commission") announced today that, on October 26, 2007, Craig H. Reinhard (Reinhard) and Debra R. Bzik (Bzik) were charged by the United States Attorney for the Eastern District of Pennsylania, by information, with one count of mail fraud and one count of making false statements to the Commission. Reinhard and Bzik were co-owners of the IDPM Group, Inc. (IDPM), a business located at 7540 Windsor Drive, in Allentown, Pennsylvania. IDPM was primarily a benefit counseling service and insurance agency.
The information charges that, from at least 1994 through February of 2006, Reinhard and Bzik participated in a scheme to defraud investors, many of them elderly, of approximately $3,661,248 by selling the investors fraudulent certificates of deposit. According to the information, investors were told that the certificates of deposit were insured by the Federal Deposit Insurance Corporation (FDIC), when in fact, they were not insured by the FDIC. Reinhard and Bzik are alleged to have used money from sales to new investors to pay interest and principal to earlier investors, to fund operating expenses for their business, for salaries for themselves, for personal expenses, and to pay commissions to others who helped to sell these certificates. If convicted, the charges carry a maximum sentence of 25 years imprisonment and a $500,000 fine. The guidelines call for sentences of approximately at least 97 months.
On March 6, 2006, the Commission obtained a preliminary injunction halting this alleged ongoing Ponzi scheme being conducted by Reinhard and Bzik. SEC v. Craig H. Reinhard, Debra R. Bzik, and The IDPM Group, Inc., Civil Action No. 06-997-CMR (E.D.Pa). The Commission's complaint charged IDPM, Reinhard and Bzik with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Without admitting or denying the allegations of the complaint, Reinhard, Bzik and IDPM consented to the entry of an order preliminarily enjoining them from engaging in the violations set forth above, partially freezing their assets, granting expedited discovery, prohibiting the alteration or destruction of documents, and ordering an accounting.
The Commission's proceeding remains pending, but has been stayed until November 30, 2007. In addition to the emergency relief obtained, the Commission's complaint seeks from each defendant a permanent injunction, disgorgement with prejudgment interest, and a civil penalty.
Additional information may be found at Litgation Release No. 19591.