Alleged Head of Atlanta-Based Investment Fraud Scheme Arraigned
ATLANTA—Andrew Avery has been arraigned on federal charges of wire fraud and mail fraud stemming from an alleged investment fraud scheme. He was indicted by a federal grand jury on October 7, 2014. Avery fled the country, but was extradited from Thailand and arrested on January 26, 2015. He is currently in federal custody.
“This defendant is charged with taking advantage of unknowing investors, stealing millions of dollars with false promises and misrepresentations about the profitability of purported Real Estate Investment Notes sold by New Day Atlanta Financial,” said Acting United States Attorney John Horn.
J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office, stated: “The FBI fully understands that investment fraud in not a victimless crime and it is hoped that the indictment, apprehension and return to the U.S. of Mr. Avery will illustrate that to the many victims in this case.”
According to Acting United States Attorney Horn, the charges, and other information presented in court: From April 2007 through May 2010, the defendant allegedly operated a company called New Day Atlanta Financial (NDA). Avery represented to potential investors that NDA sold “Real Estate Investment Notes,” or REINs, in a fund of “premium real estate investments” called “the Magnolia Fund.”
According to NDA’s website and prospectus, the REINs were promissory notes that would mature after a one- to five-year period, earning the investors up to 13% interest. The term “REIN” was invented by Avery, and a REIN is not an investment vehicle actually used by financial institutions. The Magnolia Fund was a purported $6 million dollar portfolio of Atlanta, Ga., properties that would be profitable through rental income, lease purchase income, or future sales.
Avery allegedly concealed the fact that NDA’s properties were worth far less than $6 million dollars. In addition, Avery used investor funds to purchase businesses in his own name, and for his own personal expenses. Over the course of NDA’s operation, over 70 investors lost over $3 million as a result of Avery’s misrepresentations.
In May 2010, the United States Securities and Exchange Commission filed a civil lawsuit in the Northern District of Georgia to shut down NDA. Shortly after being deposed by the SEC in connection with the lawsuit, Avery left the United States for Thailand. He was extradited from Thailand and arrested on January 26, 2015, and is currently in federal custody. Andrew Avery, 39, was arraigned before United States Magistrate Judge Gerrilyn G. Brill.
Members of the public are reminded that the indictment only contains charges. The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.
This case is being investigated by the Federal Bureau of Investigation.
Assistant United States Attorney Shanya J. Dingle is prosecuting the case.
This announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.