NORFOLK, Va. (WRIC) — This week, a federal court in Norfolk sentenced two men to a combined 28 years in prison for a years-long fraud scheme that prosecutors say raked in over $20 million from hundreds of victims.
David Alcorn, 78, of Arizona and Aghee Smith II, of California, were convicted in February in the scheme, which involved selling shares of an illusory “dental franchise business” and worthless Federal Communications Commission permits at huge markups to their mostly elderly victims.
According to an indictment filed in 2019, one of the salespeople employed in the scheme, which traded as “Dental Support Plus Franchise” or DSPF, convinced a woman to ‘invest’ half of her retirement savings in the scheme.
She never saw a penny, but her $50,000 was used to pay off earlier investors who had become unhappy with the lack of returns and obfuscation by the scheme’s primary conspirators.
The conspirators, prosecutors wrote in a press release following the sentencing, “deceived hundreds of unsuspecting investors, most of whom were at or near retirement age, by convincing them to invest in or send money to companies owned and controlled by Alcorn” and the other defendants.
Smith, meanwhile, was Alcorn’s man on the ground, promising colossal returns to retirees in exchange for cash investments.
A statement of fact attested to by another conspirator who plead guilty details how the conspirators used a Virginia Beach-based financial advisory firm, Dominion Investment Group (DIG), to push the fraudulent investments on victims in Virginia. Daryl Bank, the head of DIG was named as a co-defendant int he case, and was convicted in 2021.
Essentially, Smith and Alcorn promised their victims shares in a dental franchise group, which would funnel patients towards dentists who would pay back a portion of the fees collected to the franchising company. The idea was based on a failed company operating on the same concept, Dazzle Dental, which Smith had been involved in.
According to the indictment, the franchises were never anything close to a reality. Instead, from 2010 to 2014, they collected money from their victims to invest in “franchise shares,” then used newer investors’ money to pay off earlier investors who became disgruntled and unhappy with the lack of returns.
In 2014, Kent Maerki, who was the nominal owner of the company, abruptly shuttered it, telling investors in an email that he was only temporarily suspending operations. But just a few weeks earlier, he had sold the company’s salesforce a different story.
“We have run out of liquidity and, therefore, can no longer fund the overhead of DSPF,” he said. “I am 72 and beat up — it’s over.”
In actual fact, prosecutors claimed, he and the other conspirators had pocketed over $9 million dollars from the dental scheme alone.
And that was only half of the scam. The other half involved a company owned by Alcorn called Janus Spectrum, which purported to sell Federal Communications Commission (FCC) spectrum licenses, which allow companies to use a range of wireless frequencies in a given area.
“It’s a work free business. It really is a work free business,” Alcorn said in a video promoting the service. “It is ownership of spectrum. It has very high income historically.”
Alcorn and others collected hundreds of thousands of dollars from victims in Virginia, telling them that the company would only collect a 2% custodial fee on the investments, when in fact he was siphoning well over half of the money to pay the salespeople and himself.
Across both schemes, Smith used his Mormon faith to convince victims of his trustworthiness, appearing on a popular christian radio station and using connections at local churches to sell the fraudulent investments.
Alcorn ultimately received a sentence of 15 years and five months in prison and Smith a sentence of 13 years on counts of mail fraud, wire fraud and money laundering.