Miami Man Charged with Mail and Wire Fraud in Investment Scheme

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announce the August 10, 2011 arrest of defendant Michael Scott Segal, 50, of Miami, Florida. Segal made his initial appearance in federal court on August 11, 2011 before U.S. Magistrate Judge William C. Turnoff, who granted temporary pre-trial detention. Today, Segal had a bond hearing before Magistrate Judge Ted Bandstra, who ordered a $300,000 corporate surety bond with a Nebbia condition and a $300,000 personal surety bond secured by unencumbered property. Segal remains incarcerated pending the satisfaction of the bond conditions.

The July 21, 2011 indictment, which was unsealed upon the defendant’s arrest on August 10, 2011, charges Segal with 12 counts of mail and wire fraud, in violation of Title 18, United States Code, Sections 1341 and 1343, respectively. According to the indictment, Segal was the owner of Bright Jewel Holdings Limited Inc., a Florida corporation that purportedly engaged in the business of importing consumer products from China. More specifically, the indictment alleges that from November 2008 to February 2011, Segal devised a scheme to defraud investors using materially false representations. To execute his scheme, Segal solicited family, friends, and others to invest in his company, Bright Jewel Holdings Limited Inc, or with Segal personally. Segal offered various purported investment opportunities, including the purchase of inexpensive consumer goods from China, a land development project in China, and a Venezuelan security cargo locks deal.

According to the indictment, Segal offered investors the opportunity to purchase inexpensive consumer goods manufactured in China, and then have those goods shipped to the United States or Venezuela for re-sale at large profits. Among the goods he offered to prospective purchasers/investors were Chinese-made DVDs, cargo container security locks, Blackberry cellular telephones, shopping carts, televisions, electronic cigarettes, Playstation 3 entertainment systems, and iPods. In this way, Segal raised more than $1.3 million from investors. However, instead of investing their money to purchase the goods in China, Segal used the investors’ money to fund his personal lifestyle. Virtually no goods were purchased in China or shipped to the promised destinations.

To discourage investors from requesting distributions of their purported profits, Segal falsely told investors that he had obtained a contract from the Venezuelan government to supply cargo security locks for containers at the port, which would result in even greater profits if the investors agreed to leave their money with Segal for re-investment. In addition, to conceal the scheme and avoid detection, Segal created a Ponzi-like scheme in which he used new investor money to pay interest and returns to previous investors. In reality, however, no such investment existed either in China or Venezuela, and Segal merely used investors’ money for his personal benefit, including a down-payment on a house in Miami-Dade, the purchase of a 10-carat diamond ring, and monthly payments on several luxury automobiles.

In another scheme, Segal purportedly solicited investors to invest in a supposed land development project in China, falsely claiming that this deal would produce returns of more than 1000 percent. When investors complained about not receiving the return on their investments, Segal told them that the China land deal was taking longer than anticipated. In some cases, Segal sent refund checks, often funded with new investor’s monies, or checks with insufficient funds, to investors.

If convicted, the defendant faces a possible statutory maximum sentence of 20 years in prison on each count of mail and wire fraud.

Mr. Ferrer commended the efforts of the FBI in the investigation and prosecution of this case. This case is being prosecuted by Assistant U.S. Attorney Rosa Rodriguez-Mera.

An indictment is only an accusation and a defendant is presumed innocent unless and until proven guilty.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.