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Former President and Chief Executive Officer of Software Company Sentenced in Manhattan Federal Court to 63 Months in Prison in $6.3 Million Offering Fraud Scheme

U.S. Attorney’s Office March 28, 2014
  • Southern District of New York (212) 637-2600

Preet Bharara, the United States Attorney for the Southern District of New York, announced that Scot Zarkiewicz, the co-founder and former president, chief executive officer, treasurer, and principal owner of SingleClick Systems Corp. (SingleClick), a Delaware-incorporated, New Jersey-based software company, was sentenced today in Manhattan federal court to 63 months in prison for perpetrating a scheme to defraud SingleClick investors. From mid-2009 through June 2013, Zarkiewicz solicited several investors to purchase millions of dollars of privately held SingleClick stock based on fraudulent misrepresentations about the company’s operations and financial performance. As a result of his fraudulent scheme, Zarkiewicz collected and maintained in SingleClick approximately $6.3 million from 35 victims. Zarkiewicz pled guilty in November 2013 before U.S. District Judge Denise L. Cote., who also imposed today’s sentence.

Manhattan U.S. Attorney Preet Bharara said, “With today’s sentence, Scot Zarkiewicz is being held to account for misleading investors and betraying their trust with his multimilliondollar fraud scheme.”

According to the information to which Zarkiewicz pled guilty, statements made in open court, and other court documents:

SingleClick is a privately held software company that was engaged in the business of providing individuals and businesses with network software products that facilitate content access and network and systems management from any Internet-connected device. From mid-2009 through June 2013, Zarkiewicz solicited investor contributions to and caused investors to maintain their investments in SingleClick based on fraudulent misrepresentations.

Specifically, during the relevant period, Zarkiewicz told SingleClick investors, in both oral and written communications, that SingleClick had several large corporate clients, millions of dollars in annual revenue, and millions of dollars in cash in bank and brokerage accounts, when, in truth and in fact, and as Zarkiewicz well knew, SingleClick conducted minimal business operations, collected significantly less than a million dollars in annual revenue and did not have more than approximately $513,000 in cash on hand. Zarkiewicz made these misrepresentations to induce potential investors to purchase SingleClick shares and to induce existing investors to purchase additional shares and/or refrain from requesting redemptions of their investments. Zarkiewicz made these misrepresentations by, among other means, distributing fabricated bank, brokerage, financial, and tax statements to investors.

In May and June 2013, investors learned that SingleClick had very little cash available and confronted Zarkiewicz. Zarkiewicz admitted to investors that he lied about SingleClick’s business performance, fabricated records, and misled investors about the number of investors in and operation of SingleClick. Notwithstanding representations made in preceding years by Zarkiewicz that SingleClick had millions of dollars in revenue—including representations that SingleClick had generated $48 million in revenue in 2012—since mid-2009, SingleClick has actually been generating thousands of dollars in revenue, not millions, and SingleClick’s total aggregate bank account balances have not exceeded approximately $513,000. In August 2013, after admitting his fraudulent conduct, Zarkiewicz resigned as CEO of SingleClick.

Zarkiewicz, 41, of Toms River, New Jersey, was also sentenced to three years of supervised release and ordered to forfeit $5.5 million, as well as any remaining proceeds in SingleClick bank accounts, and to pay over $6.3 million in restitution.

Mr. Bharara praised the investigative work of the Federal Bureau of Investigation.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney David I. Miller is in charge of the prosecution. Assistant U.S. Attorney Paul Monteleoni is in charge of the asset forfeiture related to the prosecution.

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