One of three 5LINX defendants pleads guilty

One of three men accused of defrauding 5LINX, a multi-level marketing company they founded out of millions of dollars, has pleaded guilty.

Craig Jerabeck, 57, pleaded guilty Tuesday morning to conspiracy to commit wire fraud and filing a false tax return before U.S. District Court Judge David G. Larimer.

Jerabeck is facing a maximum penalty of 20 years in prison and a fine of $250,000.

In 2001, Jerabeck started 5LINX Enterprise Inc. with co-defendants Jeb Tyler and Jason Guck. The company offered utility and telecommunications services, health insurance, nutritional supplements, and business services.

5LINX used independent representatives to sell products and services, and to recruit new representatives.

Jerabeck was president and chief executive officer. Guck was vice president and secretary, And Tyler was also a vice president.

In June 2006 and July 2006, Jerabeck, Tyler and Guck sold 5LINX stock for $5.5 million to three investment companies: Trillium Lakefront Partners III L.P.; Trillium Lakefront Partners III, NY L.P.; and Shalam Investment Co. L.L.C., according to the U.S. Attorney’s Office.

Between May 2010 and April 2016, 5LINX sold and distributed products for a Florida vendor. As part of his plea agreement, Jarabeck admitted that he, together with Guck and Tyler, got about $2.3 million from the Florida vendor, which the 5LINX investors, board of directors and stock holders didn’t know about.

Jerabeck also admitted that he, Guck, and Tyler were each prohibited from receiving such money by their stockholders agreements. The investors, creditors and stockholders should have gotten the money, according to the U.S. Attorney’s Office.

Also, for the years 2011 through 2013, and 2015, Jerabeck did not report income he received from 5LINX, and he took deductions to which he was not entitled and avoided paying $118,628 in tax.

Jerabeck agreed to forfeit his interest in real property at 90 East Lake Road in Yates County.

“Today’s plea should serve as a reminder to those who seek to enrich themselves through acts of dishonesty and fraud that their gains will be short-lived,” U.S. Attorney James P. Kennedy Jr. said in a news release.

The defendants were charged in a superseding indictment in September 2017. Charges are pending against Tyler and Guck.

Sentencing for Jerabeck has not been scheduled.