The trial against former Energex CEO Thomas Fagan got underway this week in the Mercer County Superior Court in New Jersey, according to The Trentonian.
Fagan is being charged with 15 criminal counts, including several financial misconduct charges, including stealing more than $230,000 from investors while he was at the head of Allendale, N.J.-based Energex.
Many of the counts against Fagan are second-degree crimes punishable by up to 10 years in state prison.
Fagan is also being charged with 3 counts of failing to file personal income tax returns, from 2007 to 2009, as well as a fraudulent tax return in 2010.
The criminal case comes 3 years after Fagan entered an $11 million settlement with the securities bureau of the New Jersey Consumer Affairs, which filed against him in 2013 for defrauding investors, according to the paper.
Prosecutors opening statements framed the Fagan as plundering accounts to pay for gambling losses, trips to the Winter Olympics and for political contributions that may have violated election laws, The Trentonian reports.
“This case is about greed of the defendant,” deputy attorney Derek Miller, who is trying the case, said.
Defense attorneys argued that the supposedly plundered money also went to pay the salaries of 6 employees, including Fagan.
“He put his heart and soul into these companies. It’s not illegal to be paid. This isn’t money laundering. There are no offshore accounts or scheme,” Mercer County public defender Malaeika Montgomery said, according to the paper.
Back in 2013, operations at Energex came to a halt when Fagan was accused of charges including theft of investor funds, money laundering, corporate misconduct and personal tax evasion.
Some of the cash Fagan diverted from Energex Systems and a 2nd company, Arbos Acquisition partners, went to pay fora nearly $61,000 in gambling debts paying online casinos that accept paypal, personal vacations and political contributions to the Republican party, the North Jersey Record reported.
Investors put $9.5 million into Energex before the Fagan accusations surfaced. Most fled for the woods, leaving the company functionally inoperational. The company, which Fagan founded in 1999, has 1 FDA-approved device called the Energex, which uses a pulsed radiofreqency to relieve chronic joint pain.
The company was also developing the ImmunoModulator, designed to use UV light to inactivate HIV and Hep C pathogens in blood, which would then be put back in the patient as a self-contained treatment, according to Bloomberg.
Fagan denied charges that he stole more than $230,000 from investors, which the feds allege he used for the $60,772 gambling note, a $40,000 gift to his sister, $17,000 in personal legal costs and a whopping $114,030 in cash withdrawals, the newspaper reported.