Sacramento-based Comics and Internet entrepreneur Ross Rojek, 37, had made a veritable army of enemies over the past few years, including unpaid employees and unhappy customers, but few would have suspected him capable of the magnitude of fraud outlined in a grand jury indictment April 12. Following an FBI investigation, Rojek, owner of TheComicStore.com, the Comics and Comix store chain in California, Beyond the Pale Distribution and AnotherUniverse.com, was charged with eight counts of mail fraud, two counts of wire fraud and three counts of money-laundering, all resulting from an alleged scheme to use phony terrorist-tracking technology to bilk investors of more than $1.3 million.

Rojek has pled Not Guilty. The court initially set bail, requiring the posting of a $1 million property bond, but U.S. attorney James Arguelles told the Journal Rojek declined to post the bond and remains in custody. A pre-trial hearing had been set for the end of May, but Arguelles said it had been "kicked back another month" at Rojek's request. The delay will mean another month in jail for Rojek, but, as Arguelles noted, it is, like many white-collar prosecutions, a complicated case, and "he's looking at a not insignificant sentence."

Indeed, he could be sentenced to several lifetimes behind bars if convicted and given the maximum penalty of 20 years for each fraud count and another 10 years for money-laundering, as well as fines of up to $250,000 for each fraud count and up to twice the amount he is found to have illegally gained. According to Arguelles, federal sentencing in cases like this is fairly cut and dried and federal prosecutors have little leeway in requesting that penalties be adjusted up or down. "If he pleads [Guilty], he gets a minimal break, but that's it," Arguelles said.

Rojek has declined to talk to the press. His legal counsel, Stephen Naratil, told the Journal, "At this stage that we're at now, it's difficult to discuss strategy in the press." With the indictment handed down, Naratil is currently reviewing the government's evidence against Rojek preparatory to a hearing to set a trial date. The two remaining stores in Rojek's once mighty seven-store Comics and Comix chain closed the week following his arrest.

According to an affidavit filed by FBI Special Agent Kevin Baker, Rojek exploited post 9/11 fears to sell 112 investors on a facial recognition search engine and database system. The system, called Face IT or Face Information Technology, was purportedly designed to identify suspects by matching their facial features to images stored in a database, but, according to the FBI, Rojek had fabricated the entire project. Potential investors were reportedly identified from a series of "cold calls" then sent brochures and business prospectuses that described Face IT as a technology-based company formed by three ex-Netscape computer executives (identified as John Baldwin, John Venters and Michael Jackson) who had patents pending for revolutionary facial recognition software. According to the indictment, the pitch to potential investors asked for an initial investment of $10,000, promising a return of $120,000 in addition to dividends. They were allegedly told that previous investors had already doubled their money. Investments were also solicited in a similar manner through a company called American Equities Group, a purported real-estate investment trust.

Asked if such facial-recognition technology exists, Arguelles told the Journal, "I think something like it is in development, but I don't know that anybody has it yet. I know Mr. Rojek doesn't have it."

Although scams that promote nonexistent products to unwary investors are common, Arguelles said, "This is the first time I've come across this kind of capitalizing on 9/11 to pitch the product."

When one San Jose Face IT investor was asked to help bring in other investors, he insisted on first meeting with the management team. The investor and his wife and grown son were met at a Sacramento office by three men purporting to be the three ex-Netscape executives. According to FBI reports, the three men were surprised when the visitor demanded to tour the facility and see concrete evidence of his investment. "Rojek had a couple of investors come in and want to see [the Face IT system]," Arguelles said, "and he told them, 'I won't show you the product. It's top secret.'" Instead, the investor was sent on his way with assurances that the project was coming along fine and that "patents were in the works," Arguelles told the Journal.

Later, the investor told FBI Agent Heather Young that the Face IT executive who had done most of the talking was the one who had been presented to him as John Baldwin. But the investor's son had caught a different name for the same man, which he remembered as "Ross." From a line-up of seven photos of different people, the son identified Rojek as the man he had met at Face IT, according to the FBI affidavit.

Approximately a year after the first investors had been contacted by Face IT, some lost patience and approached the FBI in February of 2003. A joint investigation was launched by the FBI, the California Department of Corporations and the Sacramento Police Department. According to Agent Baker's affidavit, "Investigation determined that the addresses used by Face IT were nothing more than executive office suites where Face IT had only mail and phone services.... I have traced Face IT investor monies to five bank accounts which were either directly or indirectly controlled by Ross Allen Rojek. The bank records for these accounts has revealed that shortly after being deposited, the investor proceeds were converted to cash either by cash withdrawals or cashier checks."

Baker reported that one of the dummy offices was leased from a company that had a photocopy on file of a Texas Department of Public Records photo ID card for the leasee, who was identified as Mike Jackson. According to Baker, the photo matched Ross Rojek's driver's license photo, and a check with the Waco Police Department turned up no Mike Jackson matching the description in the Texas DPR records.

In the meantime, a cold call for American Equity Group was answered by Wisconsin resident Mark Dorman, who happened to work for the Wisconsin Department of Financial Institutions. Dorman was allegedly offered an opportunity to invest in real estate at the rate of $5,000 per investment "unit," for which he was told he could expect a return of six percent per quarter, up to 40 percent annually. After receiving the company's prospectus in the mail, Dorman determined that American Equity Group was not licensed to sell securities and, subsequently, the State of Wisconsin issued an order barring its activities. Because AEG was operating out of Sacramento, the order came to the attention of the California Department of Corporations, as did the complaint of a Sacramento resident who claimed to have been defrauded by AEG. In October of 2003, the department of corporations reported the matter to Baker, who was able to determine that AEG investment funds received by a Sacramento escrow bank were being transferred to accounts at the El Dorado Savings Bank held in the name of AEG and Face Information Technologies. But El Dorado officials knew AEG not as American Equity Group, but as American Entertainment Group, one of Rojek's many holdings and the owner of the Another Universe comics and pop-culture website. Baker had discovered another branch of his expanding investigation of Rojek.

[To read the rest of this article, please see The Comics Journal #261.]

All site contents are © 2002