President Donald Trump pardoned a Washington D.C.-area businessman, Charles O. Scott, who had been convicted of securities fraud in connection with a Cleveland-area company. Scott had been sentenced to three and a half years in federal prison for conspiring to commit securities fraud related to U.S. Lighting Group, a Euclid, Ohio-based penny stock company. He served only two weeks before receiving the pardon in May.
The pardon received minimal public attention but added Scott to a list of at least six convicted corporate fraudsters pardoned or granted commutations by Trump in his second term. White House officials described Scott as having acted based on poor advice and cited his age and early-stage dementia as factors for clemency. They also noted errors by an FBI agent that contributed to Scott’s indictment and claimed that corrected testimony might have prevented the grand jury from charging him.
The charges centered on allegations that Scott, as an early investor in U.S. Lighting Group, assisted the company’s CEO, Paul Spivak, in manipulating stock sales for personal gain. The scheme allegedly sought to increase the company’s penny stock price artificially to reach NASDAQ standards. Prosecutors said the scheme defrauded investors out of nearly $7 million from 2016 to 2019, while some stock salesmen received undisclosed commissions totaling around $2 million.
Spivak was sentenced to 17.5 years in federal prison for securities and wire fraud and is currently serving his sentence in a low-security facility in Pennsylvania while appealing his conviction. Several other company officials, including Spivak’s wife, pleaded guilty to varying roles in the conspiracy. Court documents detailed complex misconduct, including intimidation tactics, unlicensed stock brokers using fake identities, and undercover FBI agents posing as investors.
The victims of the scheme included retirees, financial advisers, and ordinary investors from Ohio and around the country who testified that they were misled regarding their investments. Many were unaware of the high commissions or the restricted nature of the stock trades. One retired fireman from Columbus became a government witness after losing a modest investment, though he had limited knowledge of Scott’s involvement.
At trial, the jury convicted Scott of violating insider trading rules by assisting Spivak in selling company shares improperly. He was acquitted of wire fraud, which required proving intent to defraud investors. Evidence showed Scott sold shares to undercover FBI agents, who promised to resell them at higher prices. The jury determined that Scott knowingly participated in the scheme but did not act with intent to defraud.
Scott’s attorney, David DeVillers, argued that Scott was unfairly targeted and indicted due to errors by the FBI and that he had no intention of defrauding investors. DeVillers emphasized Scott’s lack of prior criminal history, his upbringing in poverty, and his later success in business as evidence of character. He described the case as overreach by the government and lobbied for clemency, which ultimately resulted in Trump’s pardon.
The sentencing judge, J. Philip Calabrese, noted that Scott had lied during testimony and was aware of the scheme’s objectives, describing his actions as calculated to avoid detection by law enforcement. While Scott’s role was less significant than Spivak’s, the judge said it was critical to the conspiracy’s execution.
Supporters and critics have interpreted the pardon differently. Attorneys for Spivak argued the case exemplified over-prosecution and hoped for similar clemency or court relief for their client. Federal prosecutors declined to comment on the pardon or its impact on staff who worked on the case.
Scott’s story has drawn attention for its combination of a high-profile fraud scheme, legal complexities, and presidential clemency. Observers note that while he avoided serving the remainder of his sentence, questions remain about the broader implications of pardons on public trust and accountability in white-collar crime cases.
