Man gets probation
for scam role

The former escrow company
president apologizes to investors

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By Debra Barayuga
dbarayuga@starbulletin.com

The president of an escrow company that has since closed was sentenced to five years' probation yesterday for his role in a Ponzi scheme that bilked investors out of nearly $67 million.

Stephen Marn of Fidelity Escrow Services was also ordered to pay a $10,000 fine and perform 3,000 hours of community service. He had faced between 21 and 36 years in prison.

Marn, 66, pleaded guilty in January 2001 to conspiracy and engaging in monetary transactions involving deposits derived from the "Cayman Islands Investment" scheme, which began in June 1997 and was shut down in October 1998.

Investors were promised an 8 percent return per week for the use of their money for 13 weeks. The money was never deposited into the Cayman Islands, but used to pay those who had invested earlier, prosecutors said.

Defense attorney Robert Breakstone said Marn did not participate in the conspiracy, solicit or collect money as did others, but simply allowed money to be deposited into escrow accounts he opened.

"Mr. Marn knew what he did was wrong and what was deposited was money obtained by fraud," Breakstone said. "He acted willfully and with knowledge."

Marn, overcome with emotion, apologized to investors, totaling about 5,000, for the harm he caused and to his family for the embarrassment he brought upon them.

"I know this was wrong and I'm sorry," he said.

Assistant U.S. Attorney Larry Butrick said Marn played an important role in the scheme, which began in Hawaii then expanded to the mainland, American Samoa and Japan.

At first the scam involved only cash, which was deposited on a Friday, with payments disbursed the following Monday. When investors from the mainland, Japan and Singapore got involved and larger amounts started coming in, the scheme began accepting money orders and cashier's checks, making it difficult to cash and make payments by Monday, Butrick said. "Their savior was Fidelity Escrow."

Marn agreed to advance the cash, and he would then wait for the checks or money orders to clear.

Marn profited $45,000, fees for doing the transfers. "He wasn't taking in money from the scheme," Butrick said.

Marn cooperated with the government and was helpful in tracing money for distribution, Butrick said. In exchange for his cooperation, the government dropped three other counts of engaging in monetary transactions.

Six other individuals are awaiting sentencing in connection with the scheme, including Paul Lazzaro, one of two principals.

The other principal, Montez Salamasina Ottley, 57, was sentenced Tuesday to nearly 27 years in federal prison.