Sentencing for Costello, who has been held in jail without bail since his arrest, was scheduled for April 21.
Costello admitted in his plea agreement to lying to investors and would-be investors by falsely claiming he had graduated from the University of Minnesota and had a master’s degree in business administration from Harvard. Costello also lied by saying he had managed money for wealthy individuals and had 14 years of experience on Wall Street.
The agreement says that while Costello was lying about his qualifications from July 2019 through May 2021, more than 7,500 investors bought and sold stock in his publicly traded company, GRN Holding Corp. Those investors collectively lost about $25 million, the plea agreement says.
Nearly 30 investors in another Costello company, Hempstract, collectively lost about $6 million after relying on his false statements about the firm’s business operations, the agreement notes. Those lies included claims that a large grocery business in Chicago had made a $12 million purchase order for Hempstract products, and that Hempstract had more than 3,100 kilograms of CBD isolate valued at $10.7 million.
In another scam, Costello fraudulently diverted a total of nearly $3.7 million from three marijuana businesses that had agreements to obtain banking services from another one of his companies, Pacific Banking Corp., the plea deal said.
Finally, prosecutors wrote, Costello between October 2019 and January 2021 engaged in a fraudulent pump-and-dump stock scheme in which he manipulated the prices of multiple stocks.
In that scheme, Costello bought large blocks of stocks of the companies at low prices, and then paid another man to use a Twitter account to fraudulently promote the companies by making false claims about them. Costello made more than $625,000 from that scheme, according to his plea agreement.
The other man involved in that scheme was not identified by name by prosecutors, who used his initials, D.F., to describe him.
But in late October, a Radford, Virginia, man named David Ferraro, 44, agreed to settle a civil lawsuit filed by the Securities and Exchange Commission accusing him and Costello of engaging in pump-and-dumps of penny stocks. Ferraro was not criminally charged with Costello.
The SEC’s suit against Costello remains pending.
Article source: https://www.cnbc.com/2023/01/18/fake-billionaire-justin-costello-pleads-guilty-in-fraud.html