Jury Convicts CPA in $40 Million Ponzi Scheme
February 12, 2013 (The Charlotte Observer, N.C.) A federal jury in Charlotte has convicted a Newark, Ohio, man in connection with the "Black Diamond" Ponzi scheme, which bilked more than $40 million from mostly elderly and retired investors in North Carolina, Virginia and Ohio.
Jonathan Davey, who the U.S. Attorney's Office says was the head of the scheme, was convicted of all four charges following a 45-minute jury deliberation, according to a statement.
The heftiest charges carry a maximum sentence of 20 years in federal prison. Davey, a certified public accountant, has been released on bond, and a sentencing date has not been set.
The indictment alleges that Davey and other men involved in the scheme claimed they were operating a legitimate hedge fund called Black Diamond, but weren't.
According to the government, the group solicited money from 400 investors, using false and fraudulent claims about Black Diamond and the hedge funds they purported to run.
Black Diamond eventually collapsed without paying out any money, but the conspirators continued to bring in new investors to pay off old investors and to support their own lifestyles, according to the government.
The indictment also says that as Black Diamond began collapsing the defendants created a new scheme.
Prosecutors say Davey used an offshore shell company in Belize to funnel money to build a mansion in Ohio.
Ten other people have been found guilty of crimes related to the scheme, according to the U.S. Attorney's Office. Keith Franklin Simmons, 47, of West Jefferson was given 50 years.
CommunityONE Bank, where Davey was a customer, agreed to pay $400,000 in restitution to victims because it failed to file a suspicious activity report and maintain an effective anti-money laundering program.