Former Campbell Mayor Krinos guilty of $1.2 million investment f - WFMJ.com News weather sports for Youngstown-Warren Ohio

Former Campbell Mayor Krinos guilty of $1.2 million investment fraud

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George Krinos George Krinos
CLEVELAND, Ohio -

A former mayor of the City of Campbell could face more than a year in prison when he is sentenced for perpetrating a nearly $1.2 million investment fraud scheme.

George Krinos, 39, of Boardman, appeared in U.S. District Court on Thursday, where he pleaded guilty to one count of securities fraud and one count of willfully failing to pay taxes.

Krinos signed a waiver acknowledging that the charges are punishable by more than one year in prison.

He's scheduled to be sentenced on May 30 after a presentence investigation report is completed.

Bond was set at $20,000.

Krinos, who was Campbell Mayor from 2010 until his resignation a year later, used his companies known as Krinos Holdings to engage in a securities fraud scheme in which he sold through false and deceptive practices securities to at least ten people in Ohio, according to prosecutors.

The securities consisted of notes and private placement memoranda that were not properly registered with the Securities and Exchange Commission.

Because the securities were not registered with and therefore subject to greater scrutiny by the SEC, Krinos was limited to selling them to “accredited investors” who were generally individuals having a net worth in excess of $1 million or who met specific, high-dollar income thresholds.

From 2011 through 2014, Krinos sold the unregistered securities to the investors, causing them financial losses.

Krinos sold the securities under the pretense that his investors’ funds would be used for legitimate business purposes, including to provide venture capital to various client companies seeking funding from Krinos Holdings.

Rather than use these funds for their intended uses, Krinos instead used the money for personal expenses and to engage in unauthorized foreign currency transactions.

To entice his victims, Krinos made promises that their initial investments of $.10 per share would rise in value to as much as $5 or $6 per share.

Krinos also falsely told investors and others that he managed approximately $600 million in an investment account when he in fact had only $5 in the account.

In addition, Krinos submitted falsified letters and statements to reflect high balances in his accounts.

Krinos also falsely told investors that they were making high returns on their investments and that his relationships with the client companies was on good terms.

Contrary to his representations to his investors, Krinos actually used their funds on for his own personal use at restaurants, bars, casinos, adult entertainment clubs and hotels.

Rather than disclose these personal expenses, Krinos later characterized them as “sales and marketing” costs in a budget given to his shareholders at a meeting in Boardman, in 2013.

In addition to the securities fraud scheme, Krinos improperly withheld taxes, including federal income taxes and Federal Insurance Contribution Act taxes from his employees without paying over those taxes to the IRS. Over the course of approximately two years, Krinos improperly withheld and kept approximately $91,495 of his employees’ tax contributions from the IRS.

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