Pennsylvania Jeweler Pleads Guilty to $3 Million Ponzi Scheme
|U.S. Attorney’s Office February 22, 2013|
ALEXANDRIA, VA—Matthew James Addy, 34, of Lancaster, Pennsylvania, pleaded guilty today to securities fraud charges for running a $3 million Ponzi scheme that involved the fake purchase and resale of wholesale jewelry and loose precious stones.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after the plea was accepted by United States District Judge James C. Cacheris.
Addy faces a maximum penalty of 20 years in prison when he is sentenced on May 10, 2013.
According to court records, Addy owned Edward J. & Company, which operated a retail jewelry store in Lancaster called La Porte Jewelers. In 2010, Addy began recruiting individuals to invest in promissory notes purportedly linked to transactions involving wholesale jewelry and loose precious stones, which would be purchased through Addy’s businesses and resold to retail jewelers for a profit. Addy ultimately recruited more than 40 investors from throughout the United States, including within the Eastern District of Virginia, and Europe, and obtained more than $3 million in invested funds. Addy recruited many of the victim investors from within religious groups with which he was associated and used the affiliations to gain their trust.
The investment scheme was a fraud. Addy never conducted any of the contemplated wholesale jewelry transactions, and Addy used the vast majority of the invested funds on unrelated business and personal expenses. Approximately $670,000 was paid back out to investors during the course of the fraud as supposed profits on their investments and was designed to conceal the fraud and induce further investments in the scheme. Most of these payouts came directly from funds contributed by new investors, which made them Ponzi payments.
This case was investigated by the FBI’s Washington Field Office. Assistant United States Attorney Paul J. Nathanson is prosecuting the case on behalf of the United States.