South Carolina Man Is Sentenced To More Than Three Years For $1 Million Investment Scheme And Tax Evasion

CHARLOTTE, N.C. – Nickolas M. Godfrey, 41, of Fort Mill, South Carolina, was sentenced today to 37 months in prison for securities fraud, wire fraud, and transactional money laundering in connection with a $1 million investment fraud scheme and a related tax evasion scheme, announced Andrew Murray, U.S. Attorney for the Western District of North Carolina.  In addition to the prison term imposed, Godfrey was also ordered to serve two years under court supervision and to pay restitution of more than $1.6 million.

U.S. Attorney Murray is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and Matthew D. Line, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI). 

According to filed court documents and today’s proceedings, from 2012 to at least 2015, Godfrey obtained more than $1 million by engaging in a Ponzi scheme through his company, Coast to Coast Business Funding LLC (Coast to Coast), which purportedly provided short-term cash advances to businesses.  Over the course of the scheme, Godfrey induced at least 20 victims to invest with Coast to Coast, by falsely representing that the company was successfully generating substantial revenue.  Godfrey maintained a website for Coast to Coast, which also falsely represented that the company was accredited by the Better Business Bureau. To further solicit investments from victims, Godfrey made numerous false representations to victims, including promising returns of as much as 73.5%.

Contrary to promises made to victim investors, Godfrey used victims’ money to pay for personal expenditures and for the expenses of his other businesses, and to make Ponzi-type payments to earlier victims. 

When victims complained about missed payments and demanded more information, Godfrey tried to appease them by creating fake documents, including fake financial statements for Coast to Coast, and a fake list of clients to which Coast to Coast had purportedly provided financing.

In addition to the investment fraud scheme, Godfrey engaged in in a tax evasion scheme by evading the payment of tax liabilities assessed by the IRS related to his ownership and operation of two hair salons, Bliss Day Spa & Salon (Bliss) in Pineville, N.C., and Alter Ego Salon & Day Spa (Alter Ego) in Charlotte.  Godfrey committed tax evasion by, among other things, failing to pay federal employment taxes that he had withheld from the paychecks of employees at Bliss and Alter Ego, and taking multiple steps to thwart the IRS’ collection efforts. For example, Godfrey commingled the amounts withheld from his employees’ paychecks with other business and personal funds, including money obtained from victim investors, and used those funds to pay for personal expenses. Godfrey also lied to IRS employees attempting to collect the unpaid taxes. In addition, Godfrey filed individual U.S. Federal Income Tax Returns for the years 2009 through 2012 that failed to report accurately the net income he received from his businesses.

In imposing the sentence, Judge Cogburn noted the “serious, serious fraud” committed by Godfrey that harmed several ordinary citizens, and the need to deter others from committing similar fraud and tax evasion in the future.

In making today’s announcement, U.S. Attorney Murray thanked the FBI and IRS-CI for their investigation of the case.

Assistant United States Attorney Daniel Ryan, of the U.S. Attorney’s Office in Charlotte, handled the prosecution.