Federal Grand Jury Charges Two Dallas-Area Residents with Defrauding Investors in Gold Purchase Scheme
Defendant Arrested at JFK International Airport Prior to Boarding Flight to Ghana
|U.S. Attorney’s Office September 05, 2013|
DALLAS—A federal grand jury in Dallas returned an indictment yesterday afternoon charging two recent Dallas-area residents, Annetta Lou Smith, aka “Annette Crawford,” 49, and Warren Michael Hills, 54, with felony offenses related to a gold purchase investment fraud scheme they ran. U.S. Attorney Sarah R. Saldaña of the Northern District of Texas made the announcement today.
On August 27, 2013, according to the criminal complaint filed in the case, Smith was informed that an indictment charging Smith and Hills with fraud would be presented to a federal grand jury on Wednesday, September 4, 2013. On Sunday evening, September 1, 2013, Smith was arrested by FBI agents at JFK International Airport, where she was awaiting a flight she had booked to Ghana that was scheduled to depart later that evening. She made her initial appearance in federal court in the Eastern District of New York on Tuesday, September 3 and remains in custody; a date has not been set for her to appear in federal court in Dallas. A warrant has been issued for Hills' arrest.
The indictment charges each defendant with one count of conspiracy to commit wire fraud and two substantive counts of wire fraud. A federal indictment is an accusation by a grand jury, and a defendant is entitled to the presumption of innocence unless proven guilty. If convicted, however, each count of the indictment carries a maximum statutory penalty of 20 years in federal prison and a $250,000 fine. In addition, restitution could also be ordered.
The indictment alleges that beginning in July 2010 and continuing at least to December 2010, Smith and Hills represented to investors that they were in the business of buying gold at a discount price in Ghana. This gold, according to the defendants, came from small gold mines in Ghana that did not produce enough gold to sell to large gold refining companies. The defendants invited investors to travel to Achimoto, Ghana, and other locations in Ghana, so that they could further explain the discount gold purchase program and convince investors that the investment program was a legitimate investment opportunity.
When investors arrived in Ghana, the defendants had them open bank accounts where one account was used for investor funds, in U.S. dollars, and the other was used to deposit and transfer Ghana currency. In fact, to build each investors' trust, the defendants encouraged each investor to conduct a “test transaction” or “test purchase” in which the defendants had a particular investor wire a relatively small amount of funds from a bank in the U.S. to the defendants to purchase one kilogram of gold. This was done with the understanding that if the investor was satisfied with this initial small purchase, the investor would later agree to send additional funds to an account he had opened.
Defendants, however, fraudulently transferred investor funds to accounts they controlled in Ghana, and they fraudulently retained all the investor funds even though they well knew that they did not make all the gold shipments that they had promised to investors. The defendants tried to keep the scheme going by making false statements to investors to explain why all the promised gold had not been shipped. When investors demanded that all their invested funds be returned, the defendants refused and kept the money for themselves.
Smith and Hills caused substantial monetary losses to many investors. For example, one investor, M.W., transferred $586,833 to Hills' account in Ghana. After the test transaction of one kilogram of gold, Smith and Hills falsely promised another 12.5 kilograms of gold would be delivered to M.W. However, Smith and Hills only shipped a total of six kilograms to M.W., fraudulently retaining approximately $325,000 of M.W.s funds.
Today’s 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 is 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 mo
The case is being investigated by the FBI. Assistant U.S. Attorney David Jarvis is in charge of the prosecution.