Richard Hersch of All States ATM admits fraud in San Diego federal court

A Rancho Santa Fe man has admitted to federal charges in connection with defrauding investors out of $25 million, federal prosecutors said.

Richard M. Hersch entered guilty pleas Monday in U.S. District Court in San Diego to mail fraud and conspiracy to structure financial transactions. He faces up to 20 years in federal prison when sentenced Feb. 8 by Judge John Houston, U.S. Attorney Karen Hewitt said.

As part of the agreement, Hersch must pay at least $9.2 million to investors.

Hersch promised returns of up to six percent per week on investments into his company, All States ATM, Inc.

Investors were told his eight-year-old firm had contracts with major horse racing tracks in California and around the country. The supposed contracts were to operate ATMs in areas used by track employees, horse owners and trainers and others, in an area not accessible to the general public.

He also claimed the tracks allowed him to operate a check-cashing or loan service on the back side of the tracks for their exclusive use.

Additionally, Hersch claimed that he had 160 employees and hundreds of ATMs.

In fact, the tracks had no contracts with Hersch or his company.

Prosecutors say Hersch and others recruited more than 150 investors to invest approximately $25 million in All States ATM.

Also, Hersch admitted conspiring with others to structure 15 transaction totaling $141,500 to evade currency reporting requirements. Prosecutors say he and others pulled cash from a Wells Fargo Bank account in amounts below $9,500, knowing that cash withdrawals over $10,000 would trigger federal reporting laws.

Investigators from the FBI and the IRS criminal investigation unit worked on the case.