Department of Financial Institutions
Lexington Businessman Indicted for Wire and Securities Fraud

Press Release Date:  Wednesday, October 26, 2011  
Contact Information:  Kelly May, Public Information Officer
502-573-3390 ext. 252
800-223-2579 ext. 252
kelly.may@ky.gov
 


The following press release was issued by the Office of the United States Attorney Eastern District of Kentucky. The Kentucky Department of Financial Institutions (DFI) Was the primary investigative agency, along with the Secret Service. The Office of the U.S. Attorney is prosecuting the case.

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Lexington Businessman Indicted for Wire and Securities Fraud

   LONDON — A Lexington business owner was indicted today for using a scheme to defraud investors out of more than a million dollars.

   A Federal grand jury in London returned the indictment that charges Douglas Patrick Healy, 48, of Nicholasville, Ky., with wire and securities fraud.

   Healy’s company, known as Digital Storage Solutions (DSS), purported to sell digital storage cards that were capable of holding medical and personal information.

   At some point in 2007 until the date of this indictment, Healy allegedly made numerous misrepresentations to investors regarding his background and qualifications, existing contacts and deals that would bring large profits to the business, and capabilities of the company’s product. The investors listed in the indictment were from Utah.

   According to the indictment, some of the misrepresentations Healy made to investors included the following:

   *The company had sold thousands of cards and had thousands of customers when in fact he had sold very few, if any, cards and did not have many customers.

   *When investors inquired about Healy’s failure to keep them informed on business developments he told them he was suffering from cancer, and was being treated for cancer. Neither statement was true.

   *Healy told investors his prior felony conviction in 2001 was for forgery, when in fact the conviction was for stealing corporate funds.

   *He told investors that the pardon he was granted in 2007 was based on the Governor’s Office’s assessment that his 2001 conviction was a result of an “injustice,” when in fact the governor had granted 83 similar pardons that were not related to guilt, innocence nor any flaw in the criminal justice system.

   Healy allegedly used these misrepresentations to obtain $1.2 million from investors.

   Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, Paul R. Johnson, Special Agent in Charge, United States Secret Service, and Charles Vice, Commissioner for the Kentucky Department of Financial Institutions, jointly made the announcement today after a federal grand jury in London returned the indictment.

   The investigation preceding the indictment was conducted by the United States Secret Service and the Kentucky Department of Financial Institutions. The indictment was presented to the grand jury by Assistant United States Attorney Kenneth R. Taylor.

   Healy’s appearance before the United States District Court has not yet been set by the Court in Lexington. If convicted, Healy faces a maximum prison sentence of 20 years for each count. However, any sentence following conviction would be imposed by the court after consideration of the United States Sentencing Guidelines and the federal statute governing the imposition of sentences.

   The indictment of a person by a grand jury is an accusation only, and that person is presumed innocent unless proven guilty.

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Originally released Oct. 26, 2011

By Office of U.S. Attorney Kerry B. Harvey of the Eastern District of Kentucky
www.usdoj.gov/usao/kye
Contact: Kyle Edelen
859-685-4811
Kyle.Edelen@usdoj.gov