August 15, 2014

Former St. Joseph Man Sentenced to More Than Seven Years in Prison in Philippine Gold Scam and for Failure to File Tax Returns

GRAND RAPIDS, MI—Freeman Carl “Buck” Reed, 45, formerly of St. Joseph, Michigan, was sentenced to 87 months in federal prison for failing to file income tax returns and committing a fraud scheme involving gold bars he told investors were buried in the Philippines. He was ordered to pay $1.3 million in restitution to the fraud victims, and more than $500,000 in restitution to the Internal Revenue Service. The Honorable Janet T. Neff, U.S. District Judge, imposed the sentence. U.S. Attorney Patrick Miles, Jr. said, “Reed’s failure to file tax returns or pay any taxes — particularly in light of his extravagant lifestyle — was an insult to decent, tax-paying citizens everywhere. The fraud he perpetrated was deplorable abuse of trust. This office will continue to vigorously prosecute those involved in these kinds of crimes.”

Reed was convicted of failure to file tax returns following a jury trial in February 2014. At trial, the jury heard evidence that Reed had not filed any tax returns — or paid any taxes — for almost 10 years, despite making more than $1 million in just a three year period and living an extravagant lifestyle that included five luxury vehicles and an expensive house.

Shortly after the tax trial, Reed pled guilty to the Philippine gold fraud. He admitted that, after his direct-marketing business failed, he engaged in a scheme to defraud investors by soliciting money from investors to recover “Yamashita’s gold,” a legendary gold hoard supposedly left behind by Japanese soldiers when they were defeated by the U.S. Army at the end of World War II. Desperate for money, Reed told investors that he and a co-conspirator had located the gold and would use their money to finance the gold extraction costs. He told other investors that he had access to “gold certificates” supposedly worth millions of dollars. Reed was able to obtain $1.3 million in connection with the two schemes. Instead of using the investors’ money as promised, Reed admitted that he spent it on himself so that he could maintain his façade of wealth.

“Mr. Reed was not selling an investment; instead, he developed an elaborate hoax meant to enrich himself. The prosecution and sentencing of Mr. Reed, who diverted investor’s funds for his benefit and then intentionally failed to file income tax returns, is a fundamental element in maintaining public confidence in our tax system,” said IRS Acting Special Agent in Charge Jarod Koopman.

“For nearly a decade, Mr. Reed failed to file tax returns and defrauded investors of well over $1 million, all while lining his own packets and living an extravagant lifestyle”, stated Paul Abbate, Special Agent in Charge of the FBI Detroit Field Office. “The prosecution of Mr. Reed holds him accountable for his years of criminal conduct, and the FBI will continue to partner with the IRS to bring to justice those who commit these brazen financial crimes.”

The case was investigated by the FBI and IRS and prosecuted by Assistant U.S. Attorneys Clay Stiffler, Michael MacDonald, and Matthew Borgula.