• Subscribe to the AG's RSS Feed
  • Join the AG's FaceBook
  • Follow the AG on Twitter
  • View the AG's YouTube Channel
  • View the AG's Tumblr Page

Brown Arrests Two Men who Stole Millions Through Phony Stock Sale

Friday, June 5, 2009
Contact: (415) 703-5837

Riverside – Attorney General Edmund G. Brown Jr. announced that agents from his office, working with law enforcement in Tennessee and Nevada, arrested two individuals earlier this week for stealing millions of dollars through “phony stock sales” and an illegal pyramid scheme.

The defendants -- James A. Sweeney, II, 62, of Afton, TN and Patrick M. Ryan, 34, of Canyon Lake, CA -- were arrested on June 3, 2009 in Afton, TN and Las Vegas, NV, respectively, and are being held until they are extradited to Riverside County. Both face 78 counts of grand theft and securities fraud. Bail has been set at $8.8 million each.

“These two con men stole $8.8 million dollars through phony stock sales and an illegal pyramid scheme,” Brown said. “They stole investors’ money and used it to pay for luxury homes, fancy cars and a $100,000 Las Vegas wedding.”

Brown’s complaint contends that Sweeney and Ryan, co-founders of Riverside-based Big Co-op, Inc., stole $8.8 million from more than 1,000 Californians through an illegal pyramid scheme and phony stock sales.

Big Co-op, also operating as Ez2Win.biz, purported to be an online shopping hub where consumers could go to purchase thousands of goods and services from big name retailers including, Sears, Target and Macy’s, at discounted prices.

Pyramid Scheme

Consumers were informed that if they purchased a Big Co-op membership, they could save money on their own purchases and also earn commissions and rewards by convincing others to shop on the site.

In reality, consumers never received rebates or rewards. Instead, profits were based on recruiting others to purchase memberships, and having those purchasers recruit others to purchase memberships (and so on).

Members earned $100 commissions for every six members recruited. Those recruited then paid Big Co-op from $19.95 to $99.95 in ongoing monthly membership fees.

According to the complaint, from 2005 to 2007, Big Co-op generated $1.3 million in revenues through this pyramid scheme.

Phony Stock Sale

In addition to the pyramid scheme, the two sold phony stock in Big Co-op as a stand-alone investment and as part of certain membership plans.

At seminars and meetings across California, Sweeney and Ryan pitched Big Co-op as the future of online commerce, compared it to Google and EBay, and falsely informed investors the company was already turning huge profits. Investors were also told that an initial public offering (IPO) was imminent, and that when the company went public, the shares could climb to well over $100 per share.

In reality, Big Co-op was never profitable, there was not an impending IPO, and the only significant revenue generated was a result of the sale of phony stock and membership fees for the pyramid scheme.

Shares in the company were sold for $0.50 to $5.00, with two-for-one deals offered to investors willing to pay cash. From 2005 to 2007, Big Co-op took in $7.5 million from this scheme.

With investor cash, Sweeney and Ryan bought luxury homes, country club memberships, five Mercedes, paid for a $100,000 Las Vegas wedding and ran up $30,000 to $50,000 in monthly credit card bills.

After receiving numerous complaints, the California Department of Corporations issued two “Desist and Refrain Orders” against Sweeney, Ryan and other associates: the first, on October 23, 2006, directed them to cease selling stock in the company and the second, on May 2, 2007, directed them to cease selling memberships in the company. Following the second order, the case was referred to Brown’s office for prosecution.

On May 29, 2009, Brown filed 78 criminal charges in Riverside County Superior Court against both Sweeney and Ryan for:
• Grand theft, in violation of California Penal Code section 487(a);
• Sale of unqualified securities in violation of California Corporations Code section 25110;
• Fraud in the offer of securities in violation of California Corporations Code sections 25540/25401;
• Operation of a fraudulent securities scheme in violation of California Corporations Code sections 25540/25541; and
• Operation of an endless chain scheme in violation of California Penal Code section 327.

If convicted on all charges, each could face more than 25 years in prison.

These arrests build on Brown’s commitment to protect Californians from the get-rich-quick schemes that proliferate in a down economy. In the past few months, Brown has entered into settlements enforcing tough restrictions on three companies – YTB International, Imergent, Inc. and Stores On Line - that falsely promised customers that they could earn full-time income by selling merchandise and travel over the Internet.

A copy of the felony complaint is attached.

# # #
AttachmentSize
Complaint1.74 MB

Search News Releases

Subscriptions

Megan's Law

California Registered Sex Offender Database

Search Now

Megan's Law information is also available in these languages:

Site Navigation

Translate Website

  • Google™ Translation Disclaimer

This Google™ translation feature is provided for informational purposes only.

The Office of the Attorney General is unable to guarantee the accuracy of this translation and is therefore not liable for any inaccurate information resulting from the translation application tool.

Please consult with a translator for accuracy if you are relying on the translation or are using this site for official business.

If you have any questions please contact:Bilingual Services Program at (916) 324-5482

A copy of this disclaimer can also be found on our Disclaimer page.

Select a Language Below / Seleccione el Idioma Abajo

Close this box or use the [ X ]