James Catipay pleaded guilty yesterday (October 26) to defrauding investors through a plan to recruit plaintiffs for lawsuits against pharmaceutical firms. He was promising returns of 100 percent to 300 percent per year. His company, Prometheus, collected almost $12 million from 200 investors. Many of them were retired and lost their entire investments.
Catipay told potential investors that he would use their money to recruit potential plaintiffs who would sue pharmaceutical companies. The proceeds from these tort lawsuits would go to the investors, Catipay claimed.
According to court documents, he gave much false information to investors. Here are some of the falsehoods: that investors could collect their funds at any time; funds were available to pay the fat returns as well as redemptions; and their investments were secured by enforceable liens. A court-appointed receiver has taken over the company.