A promoter of a so-called “advance fee program” was sentenced to 14 years in prison for participating in an investment scam that deceived investors of about $ 5.7 million.
According to an unsealed indictment, James Leonard Smith of Virginia was part of a cost advance program through alleged UK-based investment firm Chimera Group. Fee advance systems typically involve promoters promising to pay a sum of money at a later date in exchange for an initial down payment. The aim is to encourage individuals and businesses unable to raise funds through conventional financing to donate money by promising large payments that will solve their financial problems.
Promoters of this type of scheme often use fabricated bank documents, such as a fraudulent stand-by letter of credit, which is offered to victims to obtain large sums of money. Scammers usually promise customers to receive hundreds of thousands or millions of dollars in return for depositing a fraction of that amount. Fraudsters can also use a fraudulent blocked funds letter, which indicates that an amount of money equal to the amount of money requested from the victim has been set aside, or “blocked”, in a bank account to give the bogus assurance that their principal payment is protected.
The stand-by letter of credit and blocked funds letter are often printed on letterhead that appears to be from a large, reputable international financial institution; however, the letters are fabricated and are not actually issued by the financial institution. According to the indictment, Smith helped fabricate these documents in this scheme.
The indictment, which was filed in the Eastern District of Virginia, also said Smith and his co-conspirators had advised the companies to temporarily loan money to Chimera, or its parent company Ion, to a high interest rate to prove their own solvency and that they are not completely dependent on Chimera or Ion for capital. And to create the illusion that the loans would lead to more substantial capital investments in companies, they would also have provided companies with agreements under which Chimera or Ion would receive a stake in the companies in exchange for the provision of capital.
Court documents show that escrow lawyers were also involved in the scam to give victims the impression that their money would be kept safe. California-based escrow attorney Stuart Jay Anderson was sentenced to four years in prison last year for his involvement in the scheme. Co-accused James Michael Johnson, 70, also from Virginia, was sentenced to more than eight years in prison in March.
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Tags: advance charge plan, Brian Michael Bridge, Chimera Group, Fraud, Ion International Holdings, James Leonard Smith, James Michael Johnson