Posted on: Wednesday, August 11, 2004

Maui investment fraud plea deal means prison

By Ken Kobayashi
Advertiser Courts Writer

A former Maui man has agreed to serve a prison term of four years and nine months for a massive fraud that bilked as many as 75 victims on the Valley Isle of millions of dollars.

John L. Cerizo pleaded guilty Monday before federal Judge Susan Oki Mollway to 12 felony wire fraud counts as part of a plea agreement which calls for the prison term and the dismissal of related fraud charges against his wife, Janeth Cerizo.

Mollway scheduled sentencing for Dec. 13.

Michael Weight, a federal assistant public defender representing the husband, said his client entered the agreement to take responsibility for his conduct, but also partly because of his wife, who is caring for their two small children.

Weight said his client would have almost certainly faced a longer prison term if convicted at trial.

The exact amount lost is still under investigation, but John Cerizo agreed to pay restitution of up to $7.5 million, according to assistant U.S. attorney William Shipley.

Shipley said it's difficult to predict how much of the losses can be recovered from Cerizo. He said some victims lost their entire retirement savings.

Cerizo, who was a licensed sales agent and a licensed broker, admitted in the plea agreement that starting in December 1999, he sought investments from insurance clients and others for what he said was a "high yield, no risk" overseas program.

But in 2001, he realized the money was lost and moved to Manila the following year, the plea agreement said. He continued to solicit money, saying he had information about valuable "Morganthau bonds," which he said were issued by the U.S. government and hidden in the Philippines since the end of World War II, the agreement said.

Cerizo also told investors that he had information about large amounts of gold buried in the Philippines at the end of the war, the agreement said.

But Cerizo admits he was actually using the money to pay expenses for himself and his family, according to the agreement.

Reach Ken Kobayashi at kkobayashi@honoluluadvertiser.com or 525-8030.