Sign In
Upcoming Event
Free Newsletter
5LINX defendants face fraud charges
5LINX defendants face fraud charges
A federal grand jury has handed up a 37-count indictment charging three former owners of 5LINX, a multi-level marketing company, with fraud.
The indictment accuses Craig Jerabeck, 56, of Rochester; Jeb Tyler, 44, of Penfield; and Jason Guck, 42, of Victor, with 29 counts of wire fraud and one count of conspiracy to commit wire fraud. Each count carries a maximum sentence of 20 years in prison and a fine of $250,000.
The superseding indictment also includes six counts of money laundering and one count of conspiracy to commit money laundering. The maximum penalty for each count is 10 years in prison and a fine of $250,000.
According to the new indictment and a previously filed indictment against the defendants, in 2001, 5LINX offered utility and telecommunications services, health insurance, nutritional supplements, and business services using independent representatives to sell products and services, and to recruit additional representatives. Jerabeck was president and chief executive officer; Guck was vice president and secretary; and Tyler was vice president.
In June and July 2006 the trio sold 5LINX stock for $5.5 million to three investment companies. From 2009 to 2014, when the investors owned a substantial stake in 5LINX, the defendants caused 5LINX, without the knowledge or approval of the investors, fraudulently to pay approximately $13.2 million to the defendants.
The defendants allegedly created fictitious independent representatives who were paid more than $11.7 million, by making it appear that the representatives had provided services to 5LINX. The money paid to the fictitious representatives eventually was transferred into the defendants.
Prosecutors claim the defendants also fraudulently caused a vendor, for whom 5LINX was selling and distributing products, to pay the defendants about $2.3 million that 5LINX should have received.
d
