Diamond investment scam Ponzi scheme duped hundreds

| Sep 22, 2020 | Investment Fraud

Millions of people in Florida and throughout the United States invest their money in stocks, mutual funds, investment bonds and physical commodities in hopes of growing their nest egg. As an investor, people also place their trust and assets in the hands of stock brokers, entrepreneurs and financial advisors.

Yet, these seemingly trust-worthy representatives are not always out for investors’ best interests. In some cases, investors’ may become victims of financial scams and investment fraud, which could leave them high and dry. According to CNBC, more than 60 ponzi schemes were uncovered last year alone. This cost Americans more than $3.25 billion in lost investments.

A promise

Hundreds of investors across America and Canada entrusted a Washington D.C. man and his partners with more than $25 million in investment funds, according to Instore. The 51-year-old man was caught in a vicious cycle of using money from more recent investments to pay the returns of earlier investors. However, none of the investment money was ever used as the Ponzi scheme ring leader promised.

The man posed as a rough diamond buyer, who purchased original, unique diamonds and then cut, polished and sold them to other purchasers. He told the victims that their investments were backed by his extensive diamond inventory, which was valued at $25 million.

Yet, the man did not own any diamonds, and never worked on any rare stones. Instead, he used the money to make luxurious purchases.

The punishment

The man, who is charged with wire fraud by South Florida federal prosecutors, now faces potential federal prison time and hefty fines. He recently appeared before the U.S. Magistrate in West Palm Beach, Florida. While people who engage in investment fraud should be held accountable for their actions, victims must pick up the pieces and move on.