Settlement in Civil Forfeiture Case Recovers Almost $2.6 Million for Victims of Investment Fraud Scheme
|U.S. Attorney’s Office September 15, 2011|
CINCINNATI—More than 90 victims of a Hamilton-based investment fraud scheme orchestrated by James D. Powell and David L. Colwell will share $2,599,152.47 as a result of two civil forfeiture actions the government filed and recently resolved.
Carter M. Stewart, United States Attorney for the Southern District of Ohio; U.S. Marshal Cathy Jones, Dugan T. Wong, Assistant Inspector in Charge, U.S. Postal Inspection Service; and Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI), announced the settlement today.
Powell, 54, and Colwell, now deceased, created several companies in Hamilton under the names of Capital Investments, Great Miami Debentures, and Great Miami Real Estate. Powell served as the president of the companies. Beginning sometime in 2002, Capital Investments held itself out as an investment company offering attractive rates of return to numerous investors in Ohio, Kentucky, and Indiana on their investment, evidenced by promissory notes and purportedly backed by a real estate portfolio of properties owned and managed by Capital Investments and Great Miami Real Estate.
Powell and Colwell sold investments in the portfolio to numerous victims, many of whom were elderly, unsophisticated, or inexperienced investors. In addition, some of the victims attended the Princeton Pike Church of God in Fairfield, Ohio with Colwell, and some of the investors were also insurance clients of Colwell.
Powell and Colwell took money from new investors to pay off old investors, a type of fraud known as a Ponzi scheme. They falsely told investors that the number of properties increased from 13 properties to 40 properties and the value of the properties increased from $4 million to more than $14 million with an overall property equity of about $10.5 million. In fact, the properties in the portfolio were in or near foreclosure and Powell and Colwell had spent the money.
Powell pleaded guilty on June 28, 2010 to one count of conspiracy to commit mail fraud and one count of wire fraud. Judge Herman J. Weber sentenced Powell to 121 months in prison on September 28, 2010. Colwell died on March 4, 2008.
The government filed two civil forfeiture actions against the proceeds of four life insurance policies and real property owned by Colwell that had been purchased in part with proceeds of the crimes.
“The deposit of the nearly $2.6 million with the Clerk of Courts was a result of a negotiated settlement of the two lawsuits and the Justice Department’s desire to seek restitution on behalf of the victims,” Stewart said. “The law enforcement agencies continue to work on the case after the initial headlines fade in order to recover as much as possible on behalf of victims.”
The funds have been turned over to the U.S. Clerk of Courts who will contact Powell’s and Colwell’s victims and determine the restitution amount each will receive.
Stewart commended the U.S. Marshals Service for their work in the restoration of forfeited funds to victims and also the Postal Inspectors and FBI agents for their cooperative investigation of the criminal case. Stewart also commended Deputy Civil Chief Donetta Wiethe, who prosecuted the civil forfeiture actions, and Senior Litigation Counsel Anne Porter who prosecuted the criminal case.