Grand Rapids, Michigan – June 22, 2006 – United States Attorney Margaret M. Chiara announced that James Horton, former president of CyberNET, pled guilty to four felony charges in United States District Court today. CyberNET was a company located and operating in Grand Rapids, Michigan, between 1992 and November 2004. The company collapsed after federal investigators executed search warrants at CyberNET headquarters on November 16, 2004.

Horton, age 54, of Grand Rapids, was charged with four federal felonies April 17, 2006. The first charge alleges that Horton engaged in a criminal conspiracy with others at CyberNET to commit bank fraud, mail fraud, and money laundering, in violation of Title 18, United States Code, Section 371. The charge describes how Horton and his co-conspirators are alleged to have executed a plan to deceive banks and other lending institutions, thereby amassing approximately $100 million from scores of lenders between 2002 and 2004. The charge carries a maximum penalty of five years in prison, plus fines and other penalties.

The second charge alleges Horton’s involvement in a specific episode of bank fraud, in violation of Title 18, United States Code, Section 1344, as a result of which Huntington National Bank extended CyberNET a $17 million line of credit. This charge carries a maximum penalty of 30 years in prison, a fine of up to $1 million, plus other penalties.

The third charge alleges that Horton engaged in money laundering, in violation of Title 18, United States Code, Section 1957. It specifically alleges that Horton used $25,000 in fraud proceeds to pay a personal debt. This charge carries a maximum penalty of 10 years in prison, plus fines and other penalties.

The fourth charge against Horton is an allegation that he attempted to conceal the whereabouts of $700,000 in fraud proceeds by transferring funds out of a CyberNET account on the day federal search warrants were executed in November 2004. This charge, an alleged violation of Title 18, United States Code Section 1956, carries a maximum penalty of 20 years in prison.

Horton told Chief U.S. District Judge Robert Holmes Bell that he was guilty of all four charges, and described what he did to commit the federal crimes charged. The defendant also told Judge Bell that he had been cooperating with the prosecution in its further investigation of others involved in CyberNET’s fraud. Judge Bell accepted the guilty plea and allowed Horton to remain on bond until sentencing. Sentencing will occur on Friday, September 29, 2006, at 8:30 a.m.

The investigation of CyberNET is being conducted by criminal investigators assigned to the Grand Rapids office of the Federal Bureau of Investigation, the Internal Revenue Service, and the United States Postal Inspection Service. The case is being prosecuted on behalf of the United States of America by Assistant United States Attorney Timothy P. VerHey. The guilty plea by Horton does not end the investigation, but no information can be provided about whether or when additional charges might be filed.