An Ohio man was sentenced to serve twenty-one years in federal prison for his role in funnelling investors to the massive "Black Diamond" Ponzi scheme that ultimately duped over 400 investors out of at least $40 million. Jonathan Davey, 50, of Newark, Ohio, received the sentence from U.S. District Judge Robert J. Conrad, Jr., who remarked that Davey's conduct "was driven by greed that the Court rarely sees." In addition to the prison sentence, Davey was ordered to pay nearly $22 million in restitution to defrauded victims.
Black Diamond was a foreign currency ("forex") trading operation masterminded by Keith Simmons. Beginning in 2007, and using a network of co-conspirators and feeder funds, Simmons solicited investors under the guise that their funds would be used in the purportedly highly successful Black Diamond trading platform. Simmons quoted Bible verses in pitching potential investors while also promising 4% monthly returns that were never at risk because no more than 20% of invested funds would be at risk at any time.
Davey served as administrator for several of the hedge funds involved in the Black Diamond Ponzi scheme, and raised over $10 million from investors though his own hedge fund, "Divine Circulation Services'. Davey told investors that he was operating a legitimate hedge fund, and that he had conducted due diligence on Black Diamond. However, neither was true. Additionally, when the Black Diamond scheme began to collapse, Davey orchestrated a separate Ponzi scheme in which he raised over $5 million to use to pay fictitious 'returns' to old investors. While investors were told that Davey managed a total of over $120 million, in reality the amount on hand was less than $1 million.
In addition to making Ponzi-style payments to investors of nearly $20 million that purportedly represented investing returns, Davey and others diverted investor funds for a variety of unauthorized personal expenses. In one example, Davey used an offshore shell company in Belize to fund the construction of an Ohio mansion. Additionally, Simmons was said to have paid women for sex and furnished "lavish love condominiums" with investor funds. Simmons was recently sentenced to a fifty-year term.