A Brockport man has admitted to defrauding investors out of almost $20 million.

Halford W. Johnson, 60, pleaded guilty to the federal charge of conspiracy to commit securities fraud. He is facing a penalty of five years in prison and a $250,000 fine when he is sentenced in April by U.S. District Court Judge Lawrence J. Vilardo.

Between September 2013, and April 2018, Johnson and co-defendant Darin R. Pastor defrauded more than 50 investors in a publicly traded company, according to the U.S. Attorney’s office.

Pastor also was charged, but he died in March.

On Sept. 6, 2013, Pastor paid $1,774.10 to buy more than 3.5 million shares of Creative App Solutions Inc. stock priced at $0.0005 per share.

The purchase amounted to 78% of the company’s shares and Pastor became the CEO and changed the company name to Capstone Financial Group Inc. Johnson was appointed chief financial officer, prosecutors said.

From September 2013, through March 2017, about 95 investors purchased Capstone stock for a total of more than $19.8 million.

Johnson and Pastor told investors that Pastor had substantial personal wealth. They created a Wikipedia page for Pastor claiming that he had a net worth of hundreds of millions of dollars.

They also misled investors and potential investors to believe that their money would be used to fund business ventures that would generate substantial profits and increase the value of Capstone stock.

Pastor delivered a PowerPoint presentation to potential investors that was actually a reworked presentation that an Arkansas business group had presented to Capstone when it was seeking funding from Capstone.

They claimed the project would generate more than $1 billion in annual revenue. In reality, they had no ability or intention to complete the energy project, prosecutors said.

The defendants also falsely told potential investors they had access to tons of gold from mines around the world that they would sell to a Hong Kong company for $1.5 billion.

And they falsely told potential investors they were working on a deal to buy livestock in Somalia and Kenya and sell in Oman for a pre-tax profit of $800 million. Later they told investors a drought prevented the deal from being completed.

Prosecutors said Pastor used millions of dollars of investors’ money to pay personal expenses and fund a lavish lifestyle for himself and his wife, including:

• Repaying personal debt
• Buying a $1.5 million house in Clarence, Erie County
• Buying a house in Florida for a relative
• Buying jewelry worth $294,640
• Paying for his wedding in the Caribbean

In April 2017, Capstone offered to buy back shares of Capstone stock from investors and pay them at least four times the amount they initially paid for the stock.

They told investors they would get the proceeds of the buyback by Dec. 31, 2017. None of the investors who accepted the buyback agreement were paid by the deadline.

Johnson and Pastor knew that Capstone did not have enough money to pay the investors who had accepted the stock buyback offer.

In early 2018, they made partial payments of about $6.7 million to investors. The total loss to investors is more than $19.8 million.

Under the terms of Johnson’s plea agreement, the judge must require $13.95 million in restitution to 55 victims who are owed as much as $3.1 million.

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