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YOUNGSTOWN -- Boardman resident and former Campbell mayor George N. Krinos was charged in U.S. Federal Court with engaging in a securities fraud scheme and willfully failing to collect and pay taxes for his employees, according to a U.S. Attorney General's release.
Krinos, through various companies known as Krinos Holdings, engaged in a securities fraud scheme in which he used false and deceptive practices with various northeast Ohio residents.
His actions caused at least 10 investors to lose nearly $1.2 million. The Federal Bureau of Investigation and the Internal Revenue Service conducted investigations into Krinos' actions.
Krinos is accused of selling debenture notes and private placement memoranda that were not registered with the Securities and Exchange Commission to at least 10 individuals living in northeast Ohio from 2011 through 2014, the indictment states.
He sold the securities under the pretense the funds would be used to provide venture capital to client companies seeking funding from Krinos Holdings. Krinos, however, used the money for personal expenses and to engage in unauthorized foreign currency transactions, according to prosecutors.
Krinos used funds for his personal us at restaurants, bars, casinos, adult entertainment clubs and hotels. He later characterized the funds as sales and marketing costs in a budget given at a 2013 shareholders meeting in Boardman.
Krinos made promises that initial investments of 10 cents per share would increase to a value as much as $5 or $6 per share.
He falsely told investors that he managed approximately $600 million in an investment account, when, in fact, he had only $5 in the account, according to the release. He falsified letters and statement to reflect high balances in his accounts.
In addition, Krinos improperly withheld taxes, including federal income taxes and Federal Insurance Contribution Act taxes from his employees without paying those taxes to the IRS. Over the course of two years, he kept approximately $91,495 in withholding that was not reported.
"This defendant lied to investors as means to funding a lavish lifestyle for himself," said Carole S. Rendon, U.S. Attorney for the Northern District of Ohio.
"Krinos' victims extend not only include those who entrusted their financial assets to Mr. Krinos, but his employees and the taxpayers whose payroll taxes were squandered to further his personal gain," said Troy Stemen, agent-in-charge of the IRS's Cincinnati field office.
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