MANSFIELD, OH (WOIO) - Four Ohio men were indicted for their roles in a conspiracy to defraud investors out of more than $7 million by selling unregistered securities and making several misrepresentations to investors about the product they purported to develop, law enforcement officials said.
Named in the 31-count federal indictment are: Kenneth Jackson, 58, of Glenmont; William Schureck, 80, of Lexington; Dennis Deciancio, 72, of Macedonia, and Daryl Dane Donohue, 66, of Mansfield. The counts include conspiracy to commit mail and wire fraud, conspiracy to launder money, mail fraud, wire fraud, money laundering, making false statements, among others.
"These men traveled around the country and deliberately misled investors," said Steven Dettelbach, U.S. attorney for the Northern District of Ohio. "They left financial hardship in their wake. Now they will be held accountable for their actions."
"These four individuals conspired to misrepresent a product to their investors in order to make a profit," said Stephen Anthony, special agent in charge of the Federal Bureau of Investigation's Cleveland office. "The FBI will continue efforts to bring to justice those that have duped investors out of their hard-earned money."
All four men were affiliated with Medical Safety Solutions, a company Jackson founded in 2007, which operated out of Mansfield and had a purported "research and development center" at Jackson's home in Glenmont, according to the indictment.
Jackson held the title of director of research and development at MSS. Schureck co-founded the company and held the title of chief executive officer at MSS. Deciancio also co-founded the company and attended trade shows on the company's behalf. Donohue was a longtime associate of Jackson, who communicated with shareholders of MSS and held himself out as an "FDA consultant" hired by the company for the sole purpose of obtaining Food and Drug Administration approval for the "Sharps Terminator," according to the indictment.
The founders of MSS held the company out as an entity created to develop, market and sell a hypodermic needle destruction device they called the Sharps Terminator. According to the indictment, the Sharps Terminator required premarket approval from the FDA before it could be sold in the U.S.
Jackson and Schureck filed a provisional application for a patent on the Sharps Terminator around April 2007, but did not file an actual patent application until September 2011. MSS filed a premarket approval application for the Sharps Terminator in October 2012, according to the indictment.
Between 2007 and May 2013, the defendants were engaged in the unregistered sale of securities. They did this by seeking individuals to buy private shares of stock in MSS, but according to the indictment, those shares were not registered with the Securities and Exchange Commission.
According to the indictment, they defrauded investors by inducing them to buy stock and making false and fraudulent misrepresentations about MSS and the Sharps Terminator, including: that MSS had submitted a premarket approval application when it had not; that FDA approval of the Sharps Terminator was forthcoming or imminent when MSS had not even initiated the approval process; that the FDA had approved the Sharps Terminator when it had not; that the product was "market ready" when it was not' and other misrepresentations.
To make MSS appear functional and the Sharps Terminator market ready, the defendants took current and prospective investors to MSS' "R&D facility" and showed them parts -- a small number of assembled Sharps Terminator units and large numbers of Sharps Terminator boxes -- many of which were really empty, according to the indictment.
MSS investors, between 2007 and 2013, incurred a combined out-of -pocket loss of more than $7 million. Jackson and Schureck transferred the money to cover other expenses, and Jackson gambled more than $3.3 million at Mountaineer Casino between 2009 and 2013, according to the indictment.
If convicted, the defendants' sentences will be determined by the court after a review of the federal sentencing guidelines and factors unique to the case, including the defendants' prior criminal records (if any), the defendants' role in the offense, and the characteristics of the violation.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial, in which it will be the government's burden to prove guilt beyond a reasonable doubt.