Two Brevard County Residents Plead Guilty in $18 Million Fraud Scheme
ORLANDO, FL—United States Attorney A. Lee Bentley, III announces that Donald Ray Babb (58, Merritt Island) and Ralph Victor Ruth (61, Melbourne) have pleaded guilty to an Information charging them with conspiracy to commit wire fraud. Each faces a maximum penalty of 20 years in federal prison. A sentencing date has not yet been set. The Information also notifies Babb and Ruth that the United States is seeking a money judgment in the amount of $18,731,125.58 and the forfeiture of their interest in the following properties: 422 Waterside Drive, Merritt Island, FL; 3502 Tipperary Drive, Merritt Island, FL; 3661 Turtle Mound Road, Melbourne, FL; 312 Sycamore Circle, Warne, NC; and 3498 NC Highway 60, Murphy, NC.
According to court documents, between June 2006 and December 2013, Babb and Ruth orchestrated a scheme in Brevard County that defrauded approximately 181 investors out of $18 million. Doing business as Southeast Mutual Insurance and Investment, LLC, Capstar Industries, LLC, and First Merchant Capital, LLC, Babb and Ruth falsely represented their businesses as licensed financial institutions whose deposits were insured by the FDIC. Using these entities, they advertised risk-free Certificates of Deposit (CD) investment opportunities that yielded high rates of return. However, neither Babb nor Ruth ever purchased a CD for an investor. Instead, they used the money to make payments to earlier investors in the scheme, and to purchase real estate and other luxury items for themselves.
This case was investigated by Federal Bureau of Investigation, the Internal Revenue Service—Criminal Investigation, the Florida Office of Financial Regulation, and the Brevard County Sheriff’s Office. It is being prosecuted by Assistant United States Attorney David Haas.