Date: August 17, 2022 Contact: newsroom@ci.irs.gov Buffalo, NY — U.S. Attorney Trini E. Ross announced that a federal grand jury has returned an indictment charging Darin R. Pastor, currently of Morristown, New York, and Halford W. Johnson, of Brockport, New York, with conspiracy to commit wire fraud and securities fraud, securities fraud, and wire fraud. The charges carry a maximum penalty of 25 years in prison. Additionally, Pastor is charged with engaging in monetary transactions with criminally derived property and conspiracy to defraud the United States. Assistant U.S. Attorney Paul E. Bonanno, who is handling the case, stated that in September 2013, Pastor obtained ownership and control of a publicly traded company named Creative App Solutions, Inc., whose stock was registered with the United States Securities and Exchange Commission. After becoming CEO of Creative App Solutions, Pastor changed the company's name to Capstone Financial Group, Inc. On September 25, 2013, Johnson was appointed Chief Financial Officer of Capstone. From September 2013, through March 2017, approximately 95 investors purchased Capstone stock in private placement offerings for approximately $19,000,000. During that time, in furtherance of the conspiracy, Pastor and Johnson fraudulently represented to investors and potential investors that Pastor had substantial personal wealth, and that Capstone was engaged in lucrative investments, such as gold, equity, and livestock deals, which would generate enormous profits for the investors. Pastor and Johnson maintained an online Wikipedia page for Pastor that misrepresented his net worth, and in soliciting investments in Capstone, encouraged potential investors to research Pastor online. Pastor actually had a negligible net worth and was millions of dollars in debt. While investors believed their money would be used to fund Capstone's business deals, millions of dollars were used to pay for Pastor's personal expenses and to fund a lavish lifestyle for himself and his wife, which included: $1.5 million to purchase a house in Clarence, New York; $738,000 to purchase a house in Florida for a relative of Pastor; $294,640 for jewelry; $118,000 for Pastor's 2013 destination wedding in St. Barts; $95,000 for furniture for Pastor's rented home in California; $57,000 for clothing from a high-end men's clothing store in Amherst, NY; $56,000 for child support payments to Pastor's ex-wife; $55,000 for tooth veneers for Pastor and his wife; and $52,000 for motor vehicles. In addition, in April 2017, Capstone offered to buy back shares of Capstone stock from its investors. Pastor and Johnson represented to investors that if they sold their Capstone shares back to the company, Capstone would pay them at least four times the amount the investors had paid for the stock by December 31, 2017. Approximately 94 investors accepted the stock buyback offer and returned their Capstone stock to Capstone. None of the investors who accepted the stock buyback offer received payment from Capstone by the December 31, 2017 deadline. Between February and April 2018, Capstone made partial payments to investors, who never received the full amounts Capstone promised to pay them pursuant to the stock buyback agreements. Pastor and Johnson were arraigned by U.S. Magistrate Judge Michael J. Roemer and released on conditions. The indictment is the result of an investigation by the and the Internal Revenue Service, Criminal Investigation Division, under the direction of Special Agent-In-Charge Thomas Fattorusso and the Federal Bureau of Investigation, under the direction of Special Agent-in-Charge Stephen Belongia. The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.
