Attorney general arrests two who stole millions in phony stock sale

Attorney General Jerry Brown

 Attorney General Jerry Brown announced that agents from his office, working with law enforcement in Tennessee and Nevada, arrested two men earlier this week for stealing millions of dollars through "phony stock sales" and an illegal pyramid scheme.

The defendants -- James A. Sweeney, II, 62, of Afton, Tenn. and Patrick M. Ryan, 34, of Canyon Lake, Calif. -- were arrested on June 3 in Afton and Las Vegas, respectively, The men are being held until they are extradited to Riverside County, Calif. Both face 78 counts of grand theft and securities fraud. Bail has been set at $8.8 million each, according to the attorney general's office. 

"These two con men stole $8.8 million dollars through phony stock sales and an illegal pyramid scheme," Brown said. "They stole investors' money and used it to pay for luxury homes, fancy cars and a $100,000 Las Vegas wedding."

The attorney general contends Sweeney and Ryan, co-founders of Riverside-based Big Co-op, Inc., stole from more than 1,000 Californians through an illegal pyramid scheme and phony stock sales.

Big Co-op, also operating as Ez2Win.biz, purported to be an online shopping hub where consumers could go to purchase thousands of goods and services from big name retailers including, Sears, Target and Macy's, at discounted prices.

Consumers were informed that if they purchased a Big Co-op membership, they could save money on their own purchases and also earn commissions and rewards by convincing others to shop on the site.

In reality, consumers never received rebates or rewards. Instead, profits were based on recruiting others to purchase memberships, and having those purchasers recruit others to purchase memberships.

Members earned $100 commissions for every six members recruited. Those recruited then paid Big Co-op from $19.95 to $99.95 in ongoing monthly membership fees.

According to the complaint, from 2005 to 2007, Big Co-op generated $1.3 million in revenues through this pyramid scheme.

In addition to the pyramid scheme, the two sold phony stock in Big Co-op as a stand-alone investment.

At seminars and meetings across California, Sweeney and Ryan pitched Big Co-op as the future of online commerce, compared it to Google and EBay, and falsely informed investors the company was already turning huge profits. Investors were also told that an initial public offering was imminent, and that when the company went public, the shares could climb to well over $100 per share.

In reality, Big Co-op was never profitable, there was not an impending IPO, and the only significant revenue generated was a result of the sale of phony stock and membership fees for the pyramid scheme, the attorney general's office said.

If convicted on all charges, each could face more than 25 years in prison.

These arrests follow other efforts by Brown to crackdown on get-rich-quick schemes.

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• Republican Meg Whitman.
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• Next up: The Democrats, starting with San Francisco Mayor Gavin Newsom.
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