Husband and Wife Indicted for Investment Fraud Scheme
|U.S. Department of Justice October 12, 2011|
WASHINGTON—A former FBI special agent and his wife were charged in an indictment unsealed yesterday for their roles in an alleged $1.3 million investment fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Virginia Neil H. MacBride; Special Agent in Charge Michael Morehart of the FBI’s Richmond, Va., Field Office; and Keith A. Fixel, Inspector in Charge of the U.S. Postal Inspection Service (USPIS), Charlotte Division.
John Robert Graves, 52, and Sara Turberville Graves, 44, both of Fredericksburg, Va., are charged in the Eastern District of Virginia with one count of conspiracy to commit mail and wire fraud, one count of mail fraud and four counts of wire fraud. John Graves was also charged with three counts of Investment Adviser Act fraud and one count of making false statements. The Graves made their initial appearance in U.S. District Court in Richmond yesterday.
According to the indictment, John Graves founded Brook Point Management (BPM) in 2003 and served as president of BPM, a corporation through which he sold insurance, performed estate and tax planning services and recruited and advised investment clients. He was a certified financial planner and held numerous securities industry registrations, including the Series 7 and Series 65 registrations. Graves is a former FBI special agent who resigned from the FBI in 1999. The indictment alleges that between approximately June 2008 and July 2011, John Graves, Sara Graves, and others devised and executed a scheme to defraud approximately 11 investors located in central Virginia of approximately $1.3 million.
As alleged in the indictment, John and Sara Graves raised investor funds through misrepresentations about the safety and security of the investments, as well as misrepresentations and omissions regarding their use of investor money. According to the indictment, John and Sara Graves used investor funds to, among other things, pay back previous investors who requested access to their money; purchase real estate in Partlow, Va.; and pay personal expenses, including credit card bills and time share dues. John Graves allegedly continued to make misrepresentations even after the scheme was uncovered, through false and misleading statements to the investors and to investigators from the U.S. Securities and Exchange Commission (SEC), FBI and USPIS.
The Graves face a maximum penalty of 20 years in prison for each count of conspiracy, mail and wire fraud, as well as a fine of up to $250,000 or twice the loss to the victims. In addition, John Graves faces a maximum penalty of five years in prison for each count of Investment Adviser Act fraud and a fine of up to $10,000 per count and five years in prison for the false statement count and a fine of up to $250,000.
This case was investigated by the FBI and USPIS. The department thanks these agencies, and the SEC, for their assistance. The case is being prosecuted by Trial Attorney Kevin B. Muhlendorf of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Jamie L. Mickelson of the Eastern District of Virginia.
A criminal indictment contains only charges and is not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.
The investigation has been coordinated by the Virginia Financial and Securities Fraud Task Force, an unprecedented partnership between criminal investigators and civil regulators to investigate and prosecute complex financial fraud cases in the nation and in Virginia. The task force is an investigative arm of the President’s Financial Fraud Enforcement Task Force, an interagency national task force.
President Obama established the Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.