Gresham Businessmen Sentenced In Fraud Case

PORTLAND, OR — Two Gresham men on Thursday were each sentenced to three years in federal prison after they were found guilty of defrauding 50 investors of roughly $2.5 million over about seven years.

Using their own companies, Theodore B. Holbrook and George J. Arauz, Jr. reportedly solicited investments under the pretense the money would be used to develop an energy technology start-up company. In reality, the pair actually used the money for personal expenses and purchases, like travel, cars, various bills, and whatever they needed to keep the scam going, according to Kevin Sonoff, public affairs officer for Oregon's U.S. Attorney.

Along with their sentence, Holbrook and Arauz were also ordered to pay more than $2.3 million in restitution.

(Sign up for our free daily newsletters and Breaking News Alerts for the Gresham Patch)

Court documents reportedly show the men used their respective companies, Prisidio Capital, LLC, Altius Capital Management, LLC, and Altius Capital Opportunities Fund, L.P., to solicit investments for their fake start-up between 2008 and 2015.

"In return," Sonoff said in a statement, "they gave investors Prisidio stock certificates and promised to convert these shares into the start-up company’s shares when it went public. In addition to funding the start-up company, Holbrook and Arauz told investors that their money would be invested in other emerging technology companies or the stock market directly."

However, that never actually happened. And even though Holbrook and Arauz redirected the funds to other sources, they still made efforts to conceal their scheme by sending their defrauded investors "promotional and investment materials to falsely represent the nature and status of their investment," Sonoff said.

The men pleaded guilty to their crimes in October 2017 and March 2018. Following the completion of their prison sentence, both men will be placed on parole for another three years.

Image via Shutterstock