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Entries in FBI (2)

Saturday
Oct152011

Former FBI Agent and Wife Indicted in Alleged $1.3 Million Ponzi Scheme

A Virginia man and his wife were indicted for their role in what authorities described as a $1.3 million Ponzi scheme.  John Robert Graves, 52, and his wife Sara Tuberville Graves, 44, both of Fredericksville, Virginia, were each charged with one count of conspiracy to commit mail and wire fraud, one count of mail fraud and four counts of wire fraud in an indictment unsealed in the Eastern District of Virginia.  Graves, a former FBI special agent, also faces three counts of Investment Adviser Act fraud and one count of making false statements.  The pair were originally charged by the Securities and Exchange Commission ("SEC") with violations of federal securities laws on April 18, 2011 in conjunction with a larger Ponzi scheme.  If convicted of the criminal charges, Mr. Graves could be sentenced to a maximum of 140 years in federal prison, while his wife faces a sentence of up to 120 years.

While Graves and his wife are charged with misappropriating $1.1 million from 11 investors, the charges apparently derive out of John Graves' involvement in a larger Ponzi scheme detailed in the SEC complaint filed in April.  According to the complaint filed by the SEC, John Graves resigned from the FBI in 1999 and became a registered representative at AIC, Inc., a privately-held holding company run by Nicholas D. Skaltsounis.  Graves was associated with Community Bankers Securities, LLC ("CBS"), one of the broker-dealers associated with AIC. Additionally, Graves was a certified financial planner and the founder and president of Brooke Point Management, Inc.  These companies participated in the sale of nearly $8 million in common stock, preferred stock, and promissory notes in AIC to at least 74 investors.  
 
Potential investors were given false and misleading documentation concerning AIC's financial condition, the risk associated with an investment in AIC, and the intended use of the funds raised.  Investors were promised annual returns ranging from 9% to 12.5%, which would purportedly be paid out of the proceeds of successful investments by AIC.  Instead, the business functioned as a Ponzi scheme, using new investor funds to pay interest and make principal redemptions to existing investors.  According to the SEC, approximately $2.5 million was used to make such payments to existing investors.  AIC had little or no revenue from business operations, and had not been profitable since it was formed in 2000.  The scheme collapsed in December 2009 when the operation could no longer pay existing investors with funds from new investors.  
 
As readers of Ponzitracker may remember, this is not the first time that an individual with ties to the FBI has been accused of running a Ponzi scheme.  In August, Cary Alan Burdette was sentenced to twenty years in prison for operating a Ponzi scheme that bilked investors out of $4 million.  Burdette was an attorney and a former FBI agent.
 
A copy of the SEC Complaint is here.
Thursday
Jul282011

Former FBI Agent Pleads Guilty to Alabama Ponzi Scheme

A lawyer and former-FBI agent has pled guilty to operating a Ponzi scheme in Trussville, Alabama that took in $4 million from swindled investors.  Cary Alan Burdette, of Trussville, had been under investigation by the Alabama Securities Commission since 2008 and has been the subject of numerous civil litigation filed by defrauded investors.

Burdette was arrested in April 2009 and charged with nineteen counts of selling unregistered securities, following the issuance of a cease-and-desist order by the Alabama Securities Commission in April 2008.  Burdette promised investors returns of up to twelve percent for their investment in real estate and medical ventures, often memorialized in a promissory note.  Instead of making these investments, Burdette used the majority of investor funds to pay returns to older investors and to pay personal and business expenses.  

Burdette, who is a licensed attorney and former member of the Federal Bureau of Investigation, is set to be sentenced next month.