Vladislav “Steven” Zubkis, a San Diego businessman with a long history of promoting fraudulent investments, pleaded guilty in federal court yesterday to conspiracy to commit mail fraud and money laundering.
As part of his plea agreement, Zubkis admitted that he defrauded investors of more than $1.8 million in two schemes, one related to the proposed purchase of a Las Vegas casino and the other to the proposed construction of a storage facility.
Zubkis, who is scheduled to be sentenced Nov. 20, faces up to five years in prison, a maximum $250,000 fine, and $1.8 million in restitution to investors. The Ukrainian immigrant also faces deportation after he has served his prison sentence.
“It can be devastating when the financial well-being of an individual falls into the wrong hands through deceit and trickery,” Kenneth Hines, a special agent with the Internal Revenue Service's criminal investigation unit, said in a statement. “The days are numbered for those who peddle false hopes and dreams and prey on investors for their own personal financial benefit.”
Zubkis' guilty plea caps a long and notorious career that began in the 1990s when he defrauded investors who bought stock in his now-defunct Stella Bella Corp., a bogus chain of coffee houses. In 2001, a federal judge imposed a $21.5 million judgment against Zubkis and banned him from being an executive or officer in a public company.
But Zubkis defied the ban, peddling stock and controlling the workings of a San Diego public company called International Brands, which is now defunct.
Yesterday, Zubkis pleaded guilty to defrauding investors in two different schemes in 2003 and 2004. He and a network of salespeople persuaded mostly elderly people to invest in a storage facility project and a casino project, promising a high rate of return.
But Zubkis failed to tell investors that San Diego County had already rejected his application to build the storage facility, or that he had defaulted on a contract to acquire a controlling interest in a casino.
Investors never made a dime on either project, according to court documents.
At the time of his arrest in December, Zubkis was promoting yet another project – a luxury time-share housing development in Baja California. Investors were asked to pay $13,000 for a time share in the venture, and promised a profit of $286,000 to $715,000.
In reality, nothing has been built but a few showrooms to lure investors, according to federal prosecutors. State and city officials in Baja California had not received applications nor issued permits for such a project.
Meanwhile, until he was arrested Dec. 7, Zubkis was living lavishly, paying $6,000 a month to rent a four-bedroom, three-bath home in Coronado and driving a Rolls-Royce.
Based on federal investigators' review of Zubkis' past activities, his cash intake rate from investors was about $200,000 per month, according to court documents.
Penni Crabtree: (619) 293-1237; penni.crabtree@uniontrib.com
