Judge Revokes Bond For Accused Ponzi Schemer After Contact With Victims

A federal judge has revoked bail for a Florida man accused of orchestrating a $70.9 million Ponzi scheme, siding with prosecutors' allegations of "brazen" violations of a "no-contact" condition of his bail.  Joseph Signore, previously free on $100,000 bail after being charged with twelve counts of mail fraud and wire fraud, was "regretfully" remanded into custody by U.S. Magistrate Judge Dave Lee Brannon.  In revoking Signore's bail, Judge Bannon found that Signore's contact with several investors violated the terms of his release, but also conceded that some responsibility for the violations lay with the attorneys that crafted the terms.  Unless Signore is able to obtain new bail terms, it is possible he could remain incarcerated until the case goes to trial.

Background

According to authorities, Signore and Paul Schumack solicited potential investors to participate in JCS Enterprises' ("JCS") Virtual Concierge program, which involved the purchase of a virtual concierge machines ("VCM") through a one-time fee ranging from $2,600 to $4,500 per VCM.  The VCM, which resembles an ATM, is a free-standing or wall-mounted machine placed in various businesses that purportedly allowed the advertisement of products or services and even the ability to print tickets or coupons.  Potential investors were told that the VCMs generated substantial returns, which in turn would allow the payment of annual returns to investors ranging from 80% to 120%. In addition, investors were provided with the location of the VCMs they had purportedly purchased, and even given the ability to track the VCM activity online.

Investors were solicited in several ways, including several websites controlled by the entities and through videos posted on popular video-sharing website Youtube.  The videos promised that the VCM would "generate income for years," and promised that a $3,500 investment could produce "huge returns."  Potential investors also received emails from Schumack, who touted his graduation from West Point Military Academy in 1979 and whose email signature also featured a Bible passage intended to create a false sense of security for investors.  

However, authorities allege that the outsized returns touted by the defendants were the result of a Ponzi scheme.  According to the SEC, the production of VCMs was not close to the amount of VCMs purportedly sold to investors, and the guaranteed returns were "a farce."  Instead, investor funds were commingled and used for a variety of unauthorized purposes, including the unauthorized transfer of more than $2 million to Signore and his family.  An additional $56,000 in investor funds were used for expenses including restaurants, stores, and a tanning salon.  Finally, approximately $4 million in investor funds were transferred to an unrelated account from which Schumack and others allegedly made more than 100 cash withdrawals of nearly $5 million. 

Signore's Release and My Gee Bo 

Following the pair's arrest last Tuesday, Judge Brannon set bond for each at $100,000.  As part of the conditions of release, Signore was permitted, to no objection, to continue operating My Gee Bo ("My Gee Bo"), another company Signore operated from his same address.  However, it soon emerged that Gee Bo had been operated in tandem with JCS, and the receiver subsequently filed an emergency motion seeking to include Gee Bo as part of the entities placed in receivership.  In that motion, the receiver detailed Gee Bo's ties to JCS, disclosing that Gee Bo had received at least $770,000 in transfers from JCS or for Gee Bo's benefit - including the payment of hundreds of thousands of dollars in JCS funds for a celebrity sponsorship from Shark Tank's Barbara Corcoran.  The Court granted the motion to include Gee Bo.  

In addition to the close ties between Gee Bo and JCS, Judge Brannon was also informed by prosecutors that Signore had engaged in contact with several individuals, including scheme victims and Gee Bo employees, in violation of a "no-contact" condition of his release.  This included communications with a JCS shareholder, Gee Bo investors, and the JCS records custodian.  According to Judge Brannon, these "evidence gathering" activities were sufficient cause to revoke Signore's bail.

A copy of Signore's motion opposing the government's motion to revoke bond is below:

Defense Response to Govt's Motion to Revoke Bond (1)