Bergen County Woman Pleads Guilty in $8 Million Ponzi Scheme Based on Phony Wholesale Company

NEWARK, NJ—A Bergen County, N.J., woman who owned a purported wholesale merchandise broker admitted today to running a multi-million-dollar Ponzi scheme that resulted in losses to investors of more than $2 million, U.S. Attorney Paul J. Fishman announced.

Jenifer Devine, 39, of Fair Lawn, owner of Devine Wholesale, pleaded guilty before U.S. District Judge Claire C. Cecchi in Newark federal court to an information charging her with wire fraud.

According to documents filed in this case and statements made in court:

From December 2008 through September 2010, Devine, through Devine Wholesale, solicited investors from New Jersey and throughout the United States, telling them she would use their money to fund her wholesale clothing and electronics business. Devine admitted that to induce the investors to make 30- to 60-day investments she promised returns of up to 25 percent per investment. Devine also showed some investors false and fraudulent inventory lists of products she was purportedly reselling. As a result of these solicitations, more than 15 investors sent over $8 million to Devine and Devine Wholesale during this time period.

Devine admitted that, contrary to her representations to investors, Devine Wholesale was not a legitimate business. Devine admitted that instead of using the investor money to purchase clothing or electronics, she used the vast majority of new investor funds to make principal and interest payments to existing investors in Ponzi scheme fashion. Devine also used a portion of the investors’ money on various personal expenses, such as a Royal Caribbean cruise and purchases at luxury retailers such as Burberry, Gucci, and Coach.

Devine admitted that as a result of her conduct, investors lost more than $2 million.

The wire fraud count to which Devine pleaded guilty carries a maximum potential penalty of 20 years in prison and a fine of up to $250,000 or twice the amount of gain to Devine or loss to victims as a result of her criminal conduct. Sentencing before Judge Cecchi is scheduled for Dec. 20, 2011.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward, for the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Matthew E. Beck of the Economic Crimes Unit in Newark.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

Defense counsel: Dennis Calo Esq., River Edge, N.J.