Prosecutors on Tuesday ordered a California federal judge to send a recently escaped man accused of a brazen $35 million fraud to jail without bail.
An FBI SWAT team apprehended fugitive Justin Costello on October 4 in a remote area near San Diego. He was carrying a backpack containing six one-ounce gold bars worth $12,000, $60,000 in U.S. currency, $10,000 in Mexican pesos and banking cards and checkbooks, prosecutors said in a court filing .
Costello, 42, also had a receipt for a prepaid phone number in his backpack, along with a driver’s license with his photo under the name “Christian Bolter,” the filing revealed.
The US Attorney’s Office for the Southern District of California cited the contents of the backpack and other factors in the filing when asking a judge to remand Costello pending trial. Prosecutors argued he was “a serious escape risk and a danger to the community.”
They found that Costello had failed to surrender to the FBI’s San Diego office as he agreed with his attorney on September 29. He had been informed that he was facing a new indictment in federal court in Washington state on a series of charges relating to penny stock schemes, shell companies and cannabis companies.
Cash and bullion as described in the court filing in the US District Court in San Diego in the case of former fugitive Justin Costello.
Source: US District Court
Instead, he had “become a fugitive,” prosecutors wrote.
“The FBI attempted to track Costello using his known cell phone numbers but was unsuccessful,” prosecutors wrote. “It is believed that Costello has counter-surveillance measures in place to prevent tracking of devices registered to these numbers.”
The FBI was eventually able to track Costello “through location information he received from theft service for the Alfa Romeo vehicle he was driving,” the filing says.
The SWAT team tracked that car to a remote area of El Cajon, California, where they saw him walking with his backpack, the filing said.
When agents arrested him, Costello said “he was surprised agents found him because he turned off his phone.”
He also told agents he did not surrender as agreed “because he recently had a stroke and was recovering.”
“Costello said that if it weren’t for the stroke, he could have outrun SWAT agents,” the filing reads. “Costello admitted he was the person charged in the indictment and encouraged agents to ‘google’ him to learn more about the case,” he continued.
“Costello was likely referring to the very significant media coverage of his charges and subsequent evasion from prosecution,” prosecutors wrote in a footnote that referenced CNBC’s article about him published last week.
Prosecutors said the FBI learned soon after that the gold in the backpack was part of a larger $94,000 lot of gold Costello bought in April “with money he stole from a bank customer.”
Investigators have determined that since mid-September, the defendant has not used his only known personal bank account for personal expenses and has instead used multiple company accounts to cover his tracks online, prosecutors said.
“The weight of the evidence” against Costello in the pending case – in which he faces charges of wire fraud and securities fraud – “is strong and well documented,” they added.
Costello, who has ties to La Jolla, California, and Las Vegas, is accused of defrauding thousands of investors and others out of millions of dollars by making false claims that companies he controlled were plotting to steal 10 other companies to buy.
He is also accused of using one of the companies, Pacific Banking Corp., to divert at least $3.6 million from three marijuana companies that were customers to benefit him and other companies he owned.
Read more about CNBC’s political coverage:
Prosecutors have said Costello used about $42,000 in money allegedly swindled by investors to pay for expenses related to his wedding. The event included a cake and ice cream sculpture featuring the iconic James Bond 007 film logo and a belly dancing performance by his bride.
Costello allegedly deceived investors with his tall tales about being a billionaire, an Ivy League graduate and an Iraqi veteran, prosecutors said. They determined that none of the claims were true.
He “also falsely claimed that two ‘[l]Local titans of Seattle’s business community “supported” him,” prosecutors wrote in their court filings. They did not name these business leaders.
Costello is scheduled to appear in federal court in San Diego on Tuesday. He is expected to be transferred soon to Washington state to face charges in the US District Court for the Western District of Washington.
An attorney representing him in a civil suit at one of the marijuana companies he is accused of fraud did not immediately respond to a request for comment.
Costello is also facing a civil lawsuit filed by the SEC the same day criminal charges against him were unsealed. This lawsuit broadly follows the allegations in the indictment.