President Donald Trump pardoned a Washington D.C. area businessman who was convicted of securities fraud over his dealings with a Cleveland-area company whose CEO bilked nearly $7 million from investors in a penny stock scheme.
Charles O. Scott, 72, of Arlington, Virginia, was sentenced to three and a half years in federal prison after a jury convicted him in 2024 of conspiring to commit securities fraud. He served two weeks of his sentence before Trump issued his pardon in May.
The pardon attracted little public notice and has not been previously reported in detail. However, it adds an early investor in an Ohio company to a list of at least six convicted corporate fraudsters who Trump has pardoned or commuted in his second term.
When asked about the pardon, a White House official said Scott was convicted “for following bad advice from someone he thought he trusted.” The official also cited Scott’s age and “early-stage” dementia. They added that an FBI agent made claims to a grand jury that led to Scott’s indictment that were disproven at trial.
“There is a chance the grand jury would not have indicted Mr. Scott if they had been provided the correct testimony,” the White House official said.
The charges centered on shares of the Euclid, Ohio-based U.S. Lighting Group, which manufactured LED light bulbs and other products and traded as an over-the-counter or “penny” stock on a minor stock exchange.
A judge sentenced the company’s CEO, Paul Spivak, 66, to 17.5 years in prison for securities and wire fraud after he and Scott were jointly tried. Spivak is appealing his case as he serves the sentence in a low-security federal prison in Pennsylvania. A long train of company officials, including Spivak’s wife, Olga Smirnova, have pleaded guilty to different roles in the conspiracy.
The federal prosecutors’ allegations were complex, but centered on accusations that Spivak and Scott, an early investor in U.S. Lighting Group, manipulated company insiders’ trading of the thinly-regulated penny stock for their private gain and as part of a plan to pump the stock price high enough to trade on the NASDAQ.
Those aims came at the expense of company investors, who prosecutors say lost approximately $6.9 million in cash between 2016 and 2019. The cash infusions boosted not only the early shareholders like Spivak and Scott, but also the stock salesmen, many of whom pleaded guilty, who made $2 million in what prosecutors called “undisclosed commissions.”
Court records detail a scheme led by a cast of characters worthy of a murder mystery novel.
It includes a government witness who told prosecutors that someone left a bag of dead rats on his doorstep to intimidate him; a company official who worked for U.S. Lighting Group as a stock salesman despite a ban from the securities industry due to a previous securities fraud conviction; several unlicensed stock brokers who used fake names to cold call investors and were hired via a Craigslist ad seeking a “Bulls–t Artist/Wolf of Wall Street Type”; and undercover FBI agents posing as yacht-trotting investors.
The victims who testified at trial included a retired lawyer from the Dayton area, a financial adviser from the Cleveland area, and pipefitters, real estate appraisers and other ordinary – and usually older – investors from around the country. They said they were misled regarding how long their money would be tied up in U.S. Lighting Group shares. And they also weren’t told about commissions as high as 50%, which would have posed a blaring red flag. Their testimony focused on Spivak and the brokers, not Scott.
One man testified about his late father’s purchases of $1.4 million in shares of the U.S. Lighting Group, and described failed attempts from both he and his father to pull money out after they learned one of the conspirators was to receive at least a 25% commission.
Michael McCusker, a retired fireman from the Columbus area, bought $5,000 in stock in 2016 at about 25 cents per share. Those shares now trade for one one-hundredth of the value of a penny.
He became a government witness to testify in the joint trial of Scott and Spivak.
McCusker said in a recent interview that he doesn’t know much about Scott or his role in the “fraudulent scam” he found himself caught up in, so he couldn’t say much about a pardon from Trump.
But no one, McCusker said, has helped make him whole.
“I have not received anything, even though I’ve tried over and over again,” he said.
Jury gave a mixed ruling on Scott. Judge said he has ‘no doubt in my mind’
At trial, jurors convicted Scott of breaking securities laws. However, they found him not guilty of wire fraud, which required proof that he acted with the intent to defraud investors.
In its simplest form, the jury convicted Scott of selling his shares on behalf of Spivak, violating rules on how company insiders who are privy to private information can sell their shares. Those shares went to the undercover FBI special agents, who promised to re-sell them to new investors at artificially higher prices.
Trump pardoned Scott in May, though it attracted little attention within a larger batch of 22 pardons and commutations, including that of P.G. Sittenfeld, a Democratic rising star in Cincinnati politics who was convicted of taking bribes as a city councilman.
Scott, through his attorney, David DeVillers, declined an interview request. DeVillers insisted that Scott never defrauded anyone and was caught in the blast radius of Spivak’s fraud based on a shoddy FBI investigation.
Before he worked as a lawyer defending alleged white collar criminals, DeVillers was appointed by Trump to serve as a U.S. attorney in the Southern District of Ohio, where he spent several years. His office led the prosecution of Sittenfeld.
He wrote a letter ostensibly to his former boss, dated March 2025, urging a pardon for Scott, and he provided a copy to Signal Ohio. DeVillers said he gave it to Scott, and it “definitely made it to the White House” but he doesn’t know how.
“Charles Scott is the victim of a level of injustice that I have never seen in my career. While I am confident that Mr. Scott will prevail on appeal, this could take years, and Mr. Scott will be in prison as a convicted felon during the twilight of this life,” DeVillers wrote in the letter.
“I hope that this injustice will be swiftly corrected through a pardon or commutation.”
Judge says Scott knew what he was doing and ‘lied’ to jurors
The trial of Spivak and Scott took place over 21 days split into two separate “phases.” Signal Ohio obtained and reviewed thousands of pages of trial and hearing transcripts for this report.
At a sentencing hearing after the jury returned its convictions against Scott, U.S. District Judge J. Philip Calabrese, a Trump appointee, expounded on the case. He didn’t mince words about Scott’s culpability.
Calabrese said he agrees with the jury’s verdict and that Scott “lied” to jurors when he testified. The recorded meetings with the FBI make clear, he said, that Scott “knew the purpose of the scheme and voluntarily participated in it.”
While his role wasn’t as serious as Spivak’s, Calabrese said it was “vital for the conspiracy to achieve its ends.”
Plus, Calabrese said Scott took active steps to avoid discussion of suspect trades on the phone or through non-encrypted messaging apps where law enforcement could be (and in fact, were) listening.
“There is really no doubt in my mind after sitting through the trial, listening to Mr. Scott’s testimony, and hearing all the evidence that in this regard, Mr. Scott knew exactly what he was doing,” Calabrese said at Scott’s sentencing hearing. “He was very careful, and that conduct was calculated to ensure that there was not a record created that could be used against him.”
An innocent man?
DeVillers, Scott’s attorney, said at Scott’s trial that his client was only indicted as an “afterthought” from prosecutors.
He cited the trial testimony of FBI Special Agent Alex Fry, who testified at trial that he erred when he testified to the grand jury in support of the government’s original accusation of Scott. Fry said he genuinely believed at the time that Scott had first invested in the company in 2016. In reality, Scott had purchased the shares in 2012.
DeVillers said Scott would have never been indicted in the first place but for the FBI’s misunderstanding.
He said Scott was convicted on narrow grounds of unlawfully helping Spivak sell free-trading shares of the company, which is prohibited from insiders. But prosecutors failed to prove any intent by Scott to defraud anyone.
Speaking to Calabrese at his sentencing hearing, Scott maintained his innocence.
“I can honestly say that I had absolutely no intention of defrauding anyone or ripping them off,” he said. “I didn’t have that intention. I didn’t do it.”
On the other hand, prosecutors asked Scott whether Spivak, who Scott referred to during trial as his “brother from another mother,” was perpetuating a fraud at the company.
“I can only go by what I’ve seen and heard here, and it sure looked like it,” Scott said at his trial, reflecting on weeks of testimony and evidence.
The U.S. Attorney’s Office for the Southern District of Ohio declined to comment on Trump’s pardons, or whether they demoralize staff who spent years prosecuting the cases.
Before his sentencing, both sides agreed on some positive elements of Scott’s character – he wasn’t as bad as Spivak, he has no criminal history, he’s a living rags-to-riches story. Scott testified about a rise from poverty that included growing up without working utilities at home in rural Virginia until he was a teenager. He graduated from college and worked in insurance and as an investor and entrepreneur. He has a long-term partner and an adult son who graduated from college.
But prosecutors argued his Horatio Alger story cuts against him in part – they referred to him as a “man of substantial wealth and resources” and said USLG was just a “side hustle” born of greed for money he hardly needed.
Emmett Robinson, an attorney for Spivak, called the case one of “profound government overreach and over-prosecution.” Between the U.S. Securities and Exchange Commission’s decision against bringing a case and the lack of a clear explanation of what Spivak did wrong, Robinson said he hopes either the courts or the White House can bring justice for Spivak as Trump did for Scott.
“President Trump obviously had the wisdom to recognize that this was a case of overreach, over-prosecution, and over-sentencing with respect to Charlie Scott, and I’m really glad that he did” Robinson said. “I hope that, with respect to [Spivak], either President Trump or the Court of Appeals will step in and do the same.”
Trump administration has pardoned others convicted of securities fraud
The Trump administration and its allies won election in part on a message that former President Joe Biden and his allies unleashed the “weaponization” of the Department of Justice against Biden’s political enemies.
Trump in response has issued pardons and commutations – some of the most absolute levers of presidential power – against other corporate officials accused of defrauding investors.
They include:
- Devon Archer, a former business partner of Hunter Biden, the former president’s son
- Trevor Milton, a Utah billionaire convicted of lying to investors about his hydrogen and electric truck company
- Jason Galanis, who aided in Republican efforts to impeach Biden and was convicted of defrauding a native American tribe and other investors
- Carlos Watson, the CEO of a media company convicted of telling brazen lies to investors, causing $60 million in losses
- Joseph Lewis, whose family owns the Tottenham Hotspur soccer club, who pleaded guilty to insider trading
- David Gentile, a private equity executive convicted of lying to investors in what prosecutors described as a $1.6 billion ponzi scheme
