Attorney General Kamala D. Harris Announces Sentencing for Phony Online Rewards Scheme

RIVERSIDE -- Attorney General Kamala D. Harris announced today that two men were sentenced to more than 30 years in state prison for stealing millions of dollars through an illegal pyramid scheme and phony stock sales.

In April 2011, James A. Sweeney, II, 64, of Afton, Tennessee, and Patrick M. Ryan, 35, of Canyon Lake, California, were found guilty on 65 counts of grand theft and securities fraud. Sweeney was sentenced to 33 years in state prison and Ryan to 31 years in state prison today in Riverside County Superior Court. Each was ordered to pay restitution of approximately $8.2 million.

Sweeney and Ryan, co-founders of Riverside-based Big Co-op, Inc., stole approximately $8.2 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 goods and services at discounted prices from big-name retailers including, Sears, Target and Macy’s.

From 2005 to 2006, Big Co-op generated $1.2 million in revenues through an illegal pyramid scheme. Consumers were informed that if they purchased a Big Co-op membership, they could save money on their own purchases plus earn commissions and rewards by convincing others to shop at the site. In reality, consumers never received rebates or rewards. Instead, their monetary gains were based on recruiting others to purchase memberships, and having those purchasers recruit others to purchase memberships (and so on).

Individuals who were recruited paid Big Co-op between $19.95 and $99.95 in monthly membership fees to be part of the Ez2Win.biz pyramid scheme.

In addition to the pyramid scheme, the two men sold phony stock in Big Co-op as a stand-alone investment.
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 turning huge profits. Investors were also told that an initial public offering (IPO) was imminent and that when the company went public, the stock would double or triple and their investment 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 as a result of the sale of phony stock and the payment of membership fees for the pyramid scheme.

Sweeney and Ryan sold shares for $0.50 to $5 and offered two-for-one deals to investors willing to pay cash. From 2005 to 2006, they took in more than $7 million from this scheme.

With investor cash, Sweeney and Ryan bought homes, country club memberships, several luxury cars, and ran up $30,000 to $50,000 in monthly credit card bills. Investor funds were also used to pay for an elaborate bachelor party in Las Vegas, a $23,000 wedding ring and a $100,000 wedding.

In October 2006, after receiving numerous complaints, the California Department of Corporations issued a desist and refrain orders against Sweeney, Ryan and other associates directing them to cease selling stock in the company. In May 2007, a second order directed them to cease selling memberships in the company. At that time, the case was referred to the Attorney General’s office for prosecution.

The case was prosecuted by Deputy Attorney General Patricia M. Fusco, with assistance from lead investigator Andy Thomas, both of the Special Crimes Unit.