Man faces 4-year
term for fraud

John Cerizo pleads guilty and will
also pay restitution of up to $7.5 million

A former Maui resident faces four years and nine months in federal prison for defrauding investors of about $7.5 million in bogus investment schemes.

John Cerizo, formerly of Wailuku, pleaded guilty yesterday in U.S. District Court to 12 counts of wire fraud in which he solicited $120,000 from investors to finance efforts in recouping millions "lost" in earlier investments.

Under a plea agreement reached yesterday with federal prosecutors, Cerizo acknowledged he faces a maximum total of $7.5 million in restitution.

Cerizo and his wife, Janeth, were indicted June 3 with 12 counts of wire fraud stemming from e-mails they sent investors between February and August 2003, soliciting money to help them search for U.S. government-issued bonds, called Morgenthau bonds, to help investors recoup their losses.

The FBI said the search for the bonds -- which were issued before World War II, allegedly were sent to the Philippines for safekeeping and remain hidden -- is a well-known fraud scheme.

Cerizo, a licensed sales agent for Massachusetts Mutual Investors, had gone to the Philippines in July 2002 after telling his investors that money they had transferred to overseas accounts in Hong Kong and Switzerland were "lost" and he was going to recoup the funds.

Cerizo told the court he had contact with people who were to lead him to the Morgenthau bonds and gold "that we had good indications was there."

He admitted he lied to investors to get them to send more money even after he learned that his sources had misled him about the existence of the bonds and gold.

About 50 people had invested $5 million from December 1999 to July 2002 in a "high yield, low risk" investment program Cerizo had touted, some more than once.

"Some transferred their entire retirement savings to invest in the program described by John Cerizo," said assistant U.S. Attorney William Shipley.

In exchange for Cerizo pleading guilty and making restitution, prosecutors will not charge him with the conduct from the high-yield, low-risk investment program and will not pursue charges against his wife, Shipley said. Cerizo will be sentenced Dec. 13.

He and his wife were arrested in Davao City, Philippines, on May 27 and returned here to face the charges.