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A local couple is facing 16 federal fraud and conspiracy counts for allegedly swindling $5 million from investors in Tucson and elsewhere by promising them astronomical financial gains.

Michael and Betsy Feinberg knowingly executed “an ongoing scheme to defraud,” and used investors’ money “to pay their own personal living expenses and support their own lavish lifestyle,” a recent grand jury indictment says.

The couple, last known to be living in a recreational vehicle in Tucson, was indicted Sept. 5 on 12 counts of securities fraud, two counts of wire fraud, one count of conspiracy to commit securities fraud and one count of conspiracy to commit wire fraud.

The Feinbergs, who lived in New York until 2002, are accused of carrying out the fraud over a 17-year period. They initially lived in Sedona, then moved to Tucson and attracted investors in both Arizona cities, the indictment said.

Investors, who were told to expect financial returns as high as 2,268 percent over three years, thought they were buying shares in a company poised to become the next Microsoft, the indictment said. In fact, the Feinbergs’ company, Catharon Software Corp., had failed since 1999 to produce a marketable product and the couple had “no experience running any company similar to Microsoft,” the indictment said.

The defendants are to be arraigned Sept 21 .

Saul M. Huerta, Betsy Feinberg’s court-appointed attorney, said she will plead not guilty. Huerta said Michael Feinberg is expected to be represented by a federal public defender, who is not yet identified in court records.

If convicted, federal prosecutors want to force the Feinbergs to forfeit any property obtained by the proceeds of crime, but it isn’t clear if investors will ever see their money.

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In a 2015 interview with the Arizona Daily Star, the Feinbergs said they were broke, living in a recreational vehicle and had a net worth of $300.

The couple has also run afoul of the Arizona Corporation Commission, which issued a cease-and-desist order against them in 2015 for selling securities without a license.

The commission said the Feinbergs spent hundreds of thousands of investor dollars on travel, massages, restaurants and an RV.

They once blew $59,000 in two months on trips to Target, Camping World, Bed Bath & Beyond, Trader Joe’s, Whole Foods, Amazon and music and art stores, the ACC said.

Contact reporter Carol Ann Alaimo at 573-4138 or On Twitter: @AZStarConsumer


Carol Ann has been with the Star since 1999, but has been an investigative reporter for more than 30 years. She's won numerous awards in the U.S. and Canada. In 2003, she was a war correspondent in Iraq and was a Knight-Wallace Fellow in Michigan in 2008.