Tennessee Ponzi Scheme Preyed on Friends and Neighbors
Tractor salesman Jeff Gentry ran a multi-million-dollar investment scheme in which he preyed on the implicit trust of friends, family, and neighbors in the small Tennessee town of Sparta.
Jeff Guth, police chief, Sparta Police Department: Everybody is looking out there to find the best return for their investments. There was nothing out there at the time that was offering what his return was. It was literally one of those deals that was too good to be true.
Slide: Jeff Gentry, of Sparta, Tennessee, swindled friends, neighbors, and family in a pyramid-style $43 million investment scheme.
Richard Fagan, FBI special agent, Cookeville Resident Agency (Memphis Division): Jeff Gentry is an individual who ran a local tractor store, had induced a number of investors to invest in a—what he referred to as like a rebate program. And is started out 6 to 7 percent rebate per month. And the return increased from 6 or 7 percent to around 10 percent, ultimately.
Any time you see something with a guaranteed return, it should be a red flag.
Guth: If you take the time to go through and check it, you would find out that none of it was true.
Slide: Gentry offered monthly double-digit returns from purported state contracts, but payouts were really from other investors' money.
Sparta is a small community. We’ve got about 5,000, there’s about 5,000 citizens inside the city proper. And it’s a close-knit community. Everybody pretty much knows everybody else and watch out for their neighbors and kind of take care of each other.
I think it was the trust that people had in him and the connections that he had. I think that’s why he was able to do what he was able to do.
Fagan: He sold for a living. He could talk to people. He could make things seem normal when they weren’t. What every scam artist needs is the gift of gab and the ability to convince you that giving me your money is the best thing to do.
Guth: You know, the last thing in your mind is well, you know, maybe this is, “Oh, I don’t need to check on what you are doing, I trust you, I trust what you are doing.” And that’s a lot of the older farmers and a lot of the older people in town, you know, trust played a big part in things, you know, you seal the deal with a handshake and, you know, and that’s kind of the way things were operated here.
Slide: Gentry's scheme came to light in December 2016, when worried investors went to the police, who then contacted the FBI.
That was a hard day for a lot of people because they were finally coming to the realization that they had been duped and that they would be lucky if they got anything back at all.
Slide: Gentry pleaded guilty in August 2017 to federal wire fraud and money laundering charges.
Slide: The seizure and auction last summer of Gentry's illegally financed assets drew thousands of prospective bidders and onlookers.
Slide: The auction proceeds of $1.3 million will be distributed among more than 50 victims of the scheme, which operated from 2012 to 2016.
Guth: We’ve had, some of the victims have sold their house and downsized to a different house. And some of them have gone out and gotten jobs. And that’s the sad reality of it all is that what’s supposed to be a time for them to enjoy their life and their hard labors, now they are not able to. And so, I think that’s the part of it that they’ll never get back.
Slide: Gentry was sentenced on May 14, 2018, to three years in prison and ordered to pay $10.4 million in restitution to his victims.
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