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United States v. Szilagyi

United States District Court, D. Arizona

December 18, 2018

United States of America, Plaintiff,
Elizabeth Gabriela Szilagyi, Defendant.



         On December 12-14, 2018, the Court held a bench trial on Counts 2 and 7 of the Superseding Indictment. Doc. 13. The government previously dismissed the other 33 counts. See Doc. 202. Counts 2 and 7 charge Defendant with wire fraud in violation of 18 U.S.C. § 1343. To prove Defendant guilty of this crime, the government must establish the following elements beyond a reasonable doubt:

First, Defendant knowingly participated in, devised, or intended to devise a scheme or plan to defraud, or a scheme or plan for obtaining money or property by means of false or fraudulent pretenses, representations, promises, or omitted facts. Deceitful statements or half-truths may constitute false or fraudulent representations;
Second, the statements made or facts omitted as part of the scheme were material; that is, they had a natural tendency to influence, or were capable of influencing, a person to part with money or property;
Third, Defendant acted with the intent to defraud, that is, the intent to deceive or cheat; and
Fourth, Defendant used, or caused to be used, an interstate or foreign wire communication to carry out or attempt to carry out an essential part of the scheme.

Ninth Circuit Model Jury Instruction 8.124; see also United States v. Woods, 335 F.3d 993, 997 (9th Cir. 2003).

         Counts 2 and 7 concern funds paid to Defendant in connection with her purported efforts to obtain hundreds of millions of dollars in international loans for victims Frank D'Aries and Matt Logan. Frankly, the entire venture was foolhardy.

         Victim D'Aries was a homebuilder in Atlanta, Georgia, who had no experience in large developments or substantial financing. He decided to undertake a large commercial and residential development, paid $50, 000 for an option on land where the project could be developed, and pursued a $50 million loan. No. bank would fund the loan because, in his words, he was “stretched out” on his other real estate projects. So D'Aries attended a conference in Florida, spoke with several individuals, and eventually was referred to Defendant as a possible source of international funding. Curiously, D'Aries was convinced by Defendant's assertion that it was easier to obtain a $100 million loan than a $50 million loan, and hired her to seek $100 million in funding. He somehow also believed that Defendant could obtain a $100 million loan on nothing more than a development plan, with no collateral or security other than some vaguely identified gold bullion that Defendant purportedly could access somewhere. When D'Aries eventually lost his option on the land, he continued to seek the financing through Defendant, apparently thinking that he could obtain the loan even though he had no rights to the land where it would be used for development.

         Victim Matt Logan's plan was just as unrealistic. He too was a homebuilder - in the Houston area - and decided to build a plant that would convert cow manure and other garbage into gasoline, would cost some $650 million, and for which he had not acquired the necessary fuel-conversion technology. He apparently believed that he could obtain a $650 million loan before he secured rights to the technology necessary to make his plan successful (assuming the technology worked in any event). Logan also accepted Defendant's farfetched assertion that she could obtain a $100 million loan on nothing more than his gasoline-plant concept and then transform it into $650 million in a mere three months by use of an unspecified “trading platform.”

         In short, both victims were pursuing utterly fanciful funding schemes. This does not relieve Defendant of any fraud she committed. As the government has noted, there is no requirement that the scheme be reasonably calculated to deceive only persons of ordinary prudence and comprehension. Doc. 183; United States v. Ciccone, 219 F.3d 1078, 1083-84 (9th Cir. 2000). The fraud statutes protect even the most gullible. Id. at 1083. But the Court cannot tell from the evidence surrounding this venture whether Defendant was a knowing fraudster or just another daydreamer.

         At the beginning of trial, the government said it would prove that Defendant made three misrepresentations to the victims: (1) she had the ability to obtain the loans sought by the victims, (2) the loans would close within specific time periods, and (3) the money transmitted to Defendant by the victims as alleged in Counts 2 and 7 would be used for specific purposes: to register the victims' corporations and obtain legal addresses in Europe. The Court will address each alleged misrepresentation.

         1. Ability to Obtain the Loans.

         Although the financing scheme was unrealistic from the beginning, the government has not proven beyond a reasonable doubt that Defendant knew she lacked the ability to obtain the financing. The government presented no evidence regarding Defendant's education or past business experience. The government confirmed that Defendant maintained an office in Europe and incurred business expenses there, but presented no evidence regarding the nature of that business or why it precluded her from attempting to obtain the financing. The government noted that Defendant claimed to have closed a billion-dollar loan in the past, but presented no evidence that she did not. The government asserts that there is no evidence Defendant ever ...

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