Pennsylvania Jeweler Sentenced to 51 Months in Prison for Running $3.4 Million Ponzi Scheme
|U.S. Attorney’s Office June 07, 2013|
ALEXANDRIA, VA—Matthew James Addy, 34, of Lancaster, Pennsylvania, was sentenced today to 51 months in prison, followed by three years of supervised release, for running a $3.4 million Ponzi scheme that involved the fake purchase and resale of wholesale jewelry and loose precious stones. Addy was also ordered to pay $2,741,321 in restitution to his victims and to forfeit to the government hundreds of thousands of dollars in jewelry.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after sentencing by United States District Judge James C. Cacheris. Addy pleaded guilty to securities fraud charges on February 22, 2013.
According to court records, Addy owned Edward J. & Company, which operated a retail jewelry store in Lancaster called La Porte Jewelers. In 2010, Addy began recruiting individuals to invest in promissory notes purportedly linked to transactions involving wholesale jewelry and loose precious stones, which would be purchased through Addy’s businesses and resold to retail jewelers for a profit. Addy ultimately recruited more than 40 investors from throughout the United States, including within the Eastern District of Virginia, and from Europe and obtained nearly $3.4 million in invested funds. Addy recruited many of the victim investors from within religious groups with which he was associated and used those affiliations to gain their trust—often referred to as “affinity fraud.”
The investment scheme was a fraud, Addy never conducted any of the contemplated wholesale jewelry transactions, and Addy used the vast majority of the invested funds on unrelated business and personal expenses and to support his comfortable lifestyle.
Approximately $665,000 was paid back out to investors during the course of the fraud as supposed profits on their investments and was designed to conceal the fraud and induce further investments in the scheme. Much of these payouts came directly from funds contributed by new investors, known as Ponzi payments.
This case was investigated by the FBI’s Washington Field Office. Assistant United States Attorney Paul J. Nathanson prosecuted the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae.