A former Frederick businessman confessed yesterday to obtaining thousands of dollars in advance fees to raise capital for struggling businesses, but failing to deliver on his promises.
Stephen E. Witt, 34, pleaded guilty in U.S. District Court in Baltimore before Judge J. Frederick Motz. Under the agreement, prosecutors will seek a 21-month sentence without parole and $300,000 in restitution to Witt's clients.
Assistant U.S. Attorney Joseph L. Evans presented evidence that Witt purported to arrange venture capital loans through Stephen E. Witt and Co. (SEWCO) Frederick.
Clients agreed to pay him a percentage of the money he raised, but he also charged advance fees of up to $10,000, Mr. Evans said. BetweenJanuary 1989 and June 1990, he received about )) $225,000 in advance fees without obtaining a single loan for any client, the prosecutor said. In all, Witt's clients lost nearly $500,000.
Witt also referred clients to a co-defendant, Lawrence W. Hill, of Lincoln, England, who operated a business known as International Equity Funding Corp. Mr. Hill is said to have told people he represented a consortium of European banks interested in making loans. He also charged substantial advance fees, Mr. Evans said.
Mr. Hill has been indicted by a federal grand jury in here, and the U.S. attorney's office is seeking to extradite him from England. Mr. Hill also has been charged in a similar scheme in Boston.