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Tuesday, July 29, 2003 - Page updated at 12:00 AM

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Investment guru John Wayne Zidar gets 30-year term

Seattle Times staff reporter

A former janitor turned investment guru was sentenced to 30 years in federal prison yesterday for orchestrating one of the largest fraud cases in state history.

John Wayne Zidar, 60, was convicted in August of swindling nearly $74 million from thousands of investors in an elaborate Ponzi scheme that preyed on people's distrust of the government.

By the end, the investment ring had taken on religious trappings, prosecutors said, with Zidar presenting himself as a descendant of the prophet Isaac.

Even after his 2001 indictment on wire fraud, mail fraud, money laundering and conspiracy, Zidar "continued to prey on the victims," said Assistant U.S. Attorney Andrew Friedman, citing $100,000 that a group of former investors raised for Zidar's legal defense.

In issuing the sentence, U.S. District Judge Barbara Rothstein noted Zidar's abuse of trust, his lack of remorse and his refusal to cooperate with prosecutors.

But Rothstein also considered Zidar's age, deciding against the life sentence sought by prosecutors.

The 30-year sentence represented about twice the life expectancy of a man Zidar's age, Rothstein said, while still allowing him the possibility of one day being free from jail.

Zidar, of Gardnerville, Nev., made a curious last-minute defense, telling the judge that his name as spelled out in all capital letters in the indictment represented not him but a registered corporate trademark.

"The accused in this case is a commercial property," he said. "I am flesh and blood."

Silver-haired and wearing a blue prison uniform, Zidar also proclaimed his innocence.

"I never intended to harm anyone," he said.

His attorney, Robert Caruso of Spokane, cited several high-profile fraud defendants who had received markedly lighter sentences.

They included Michael Milken, Ivan Boesky, Charles Keating and, most recently, Sam Waksal, the former ImClone CEO who was sentenced to seven years for securities fraud.

Rothstein dismissed the argument, noting that in all but the Keating case the defendants had pleaded guilty and cooperated with the government.

"So those cases are easily distinguishable," she said.

According to prosecutors, Zidar and co-defendant Steven C. Moreland ran investment clubs that catered to tax protesters, libertarians and members of the so-called "patriot movement" — people reluctant to trust the government.

Moreland, of Tyler, Texas, is awaiting sentencing.

Zidar, who once worked as a school janitor and never graduated from high school, had set up a Web site with links to other fringe sites and lectured on a secret tax-free economy and government conspiracies that he claimed were preventing everyday individuals from benefiting from it, according to prosecutors.

The government showed that officers in three investment clubs — Vista International, Oakleaf International and Rosewood International — had spent millions of dollars on themselves, purchasing luxury homes, race cars and other automobiles.

Four individuals involved in the scam, including a woman who managed the books and poured tens of millions of dollars through an account in a tiny branch bank in Enumclaw, pleaded guilty earlier and testified against Zidar and Moreland. Bank officials notified federal authorities of the activity more than three years ago, initiating the investigation.

Much of the money found its way into banks in Samoa, the Bahamas and Costa Rica.

Agents have recovered more than $20 million from those accounts.

More than 3,200 people have filed claims with the federally appointed receiver in the case, said Friedman.

"The jury's verdict and today's sentence both send a strong warning to anyone who would attempt this type of crime," said IRS special agent Dan Wardlaw.

Ray Rivera: 206-464-2926 or rayrivera@seattletimes.com

Copyright © 2003 The Seattle Times Company

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