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Repeat Offenders Sell Viatical & Life Settlement Investments

August 3, 2005

Gregory A. White, United States Attorney for the Northern District of Ohio, announced today that a grand jury sitting in Cleveland, Ohio, returned an indictment against John Edward Prokop and Lisa Marie Tokarsky, a.k.a. Lisa Marie Rosati, charging them with one count of conspiracy, twenty counts of mail fraud, nine counts of wire fraud, one count of securities fraud, one count of money laundering, and one count of conspiracy to commit money laundering; in addition, Prokop was charged with eight counts of false declarations before court, and Tokarsky was charged with four counts of false declarations before court. These charges were in connection with a fraudulent scheme to defraud investors in payphones, viatical contracts, and automated teller machines (ATMs).

Prokop, age 77, currently resides at 1320 Barbie Drive, Youngstown, Ohio, while Tokarsky, his daughter, age 44, resides at 2040 Samuel Court, Youngstown, Ohio.

The indictment charges that from in or about 1997 through December 2002, Prokop and Tokarsky conspired to commit mail fraud, wire fraud, and securities fraud. Beginning in 1997, through in or about September 2000, Prokop and Tokarsky, operating under Pro Insurance Agency, Inc., and later under Pro Insurance Associates, Inc., expended significant sums of money in order to aggressively advertise, promote and sell non-traditional investments marketed through ETS Payphones, Inc. (ETS), in Atlanta, Georgia, ATMs being marketed through JED Technologies in Clearwater, Florida, and viatical contracts being marketed through American Benefits Services, in Lake Worth, Florida, which filed for bankruptcy in August 1999, and later through Mutual Benefits Corporation, located in Ft. Lauderdale, Florida.

The indictment further charges that Prokop and Tokarsky falsely claimed in radio programs and in the print media, including in fliers, the Yellow Pages, newspaper, and billboard advertisements, that the investments they sold were safe, had no risk, and were guaranteed with a high rate of return. The indictment lists a number of charged false claims by the defendants made in radio programs and in the print media.

According to the indictment, Prokop and Tokarsky would move and attempt to move investors from one of the above-mentioned investments to another in order to keep their funds tied up with them, thereby earning commissions based on a percentage of the sales price from the above-mentioned companies. Despite claims by the defendants to investors that these investments were all safe, secure, and would yield a high rate of return, all of the above companies failed.

According to the indictment, Prokop and Tokarsky targeted retired investors in their advertising and sales pitches, claiming that the investments they were making were safe, risk-free, and guaranteed with a high rate of return, and were well suited for retired individuals on fixed incomes. Various pitches in advertising on the radio and in person to investors are set forth in the indictment, where these pitches falsely represented the safety, security and yield of these investments and the services which the defendants would provide, including the defendants "guaranteeing" the investments.

The indictment alleges that a number of states, including Arizona, Iowa, Kansas, North Carolina, Pennsylvania, and Wisconsin issued Cease and Desist orders stopping the sale of ETS payphones, viaticals, and ATMs which were being sold by the defendants. At no time did the defendants ever disclose to investors the fact that sales operations were being shut down by these states. The indictment further charges that at one point, in order to circumvent the State of Pennsylvania's prohibition of the sale of payphones, Prokop set up, and caused to be set up, mailing addresses for Pennsylvania investors at Mail Boxes, Etc., in Tampa, Florida, to create the appearance that these investors were not Pennsylvania residents.

The indictment further states that Prokop and Tokarsky would use company money from both Pro Insurance Agency, Inc., and Pro Insurance Associates, Inc., which included the proceeds from the commissions of the above-mentioned investments, to spend more than $100,000 directly for their personal benefit.

The indictment charges that from the period of January 1997, through December 2002, Prokop and Tokarsky collectively sold over $9.8 million of payphones from ETS; approximately $612,000 of viatical settlements from American Benefits Services; approximately $5,668,399 of viatical settlements from Mutual Benefits Corporation; and approximately $855,000 of ATM machines from JED Technologies. During this same period Prokop and Tokarsky, through Pro Insurance Agency, Inc., and Pro Insurance Associates, Inc., collected commissions of approximately $1.3 for the sale of payphones; more than $566,840 from the sale of viatical settlements, and an estimated $85,500 from the sale of ATM's. The indictment further charges that from 1998 through 2000, Prokop took $824,566 in compensation, and Tokarsky, in addition to using company funds directly for her personal benefit, took $705,581 in compensation collectively from Pro Insurance Agency, Inc., and Pro Insurance Associates, Inc.

Both Prokop and Tokarsky were charged with mailing and sending by interstate wire, investor purchase agreements and with mailing investor checks to Florida as part of the ETS payphone investment. Prokop and Tokarsky also caused checks to be mailed from Florida to them as commissions for their sales of ETS payphones.

Both Prokop and Tokarsky were charged with false declarations in connection with their testimony in a civil lawsuit brought by a number of investors in the Youngstown, Ohio, area in connection with the above-mentioned investments.

If convicted, the defendants' sentences will be determined by the Court after review of factors unique to this case, including the defendants' prior criminal record, if any, the defendants' role in the offense and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

This case is being prosecuted by Assistant United States Attorney Christian H. Stickan and Assistant United States Attorney Justin J. Roberts following an investigation by the Youngstown office of the Federal Bureau of Investigation.