LA man charged with investor fraud, tax evasion goes to trial

Dec. 8, 2009 | KPCC Wire Services

A 51-year-old man accused of tricking people into investing in bogus start-up Internet companies and evading federal income taxes is scheduled to go on trial today. Jury selection is expected to begin at 10 a.m.

Charles Norwood, AKA Thomas Gray, pleaded not guilty in 2008 in U.S. District Court in downtown Los Angeles to 15 federal charges, including tax evasion, mail fraud and wire fraud.

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He faces up to 75 years in federal prison and $3.75 million in fines if convicted of all charges, the U.S. Attorney's Office said.

According to prosecutors, Norwood solicited people to invest in his purported Internet start-up companies, including one called Cal Broadband.

Norwood allegedly tricked investors into believing Cal Broadband had been in business for years and was an internationally recognized wireless high-speed Internet provider. In fact, it was nothing more than a name Norwood created, Michael Moriarty of the Internal Revenue Service alleged.

Norwood also allegedly lied to investors by telling them he had licensing agreements and business affiliations with large computer and telecommunications companies. No such agreements existed and Cal Broadband had no subscribers, Moriarty said.

Norwood allegedly used investors' funds to support a lavish lifestyle, including part-time residencies in top hotels in Los Angeles and Beverly Hills.

Victims' funds also went toward rent payments for Norwood's mother's condominium and to hire several unlicensed brokers and telemarketers to pick out and identify more potential investors in his purported companies, according to court documents.

Norwood allegedly used his former name, as well as the names of other people, as officers and directors of the companies he promoted, Moriarty said.

The indictment charges Norwood with evading his federal income taxes for the years 2000 and 2001.

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