CPA Convicted for Role in $40 Million Ponzi Scheme

A federal jury took 45 minutes to convict an Ohio man of multiple criminal charges relating to his involvement with the 'Black Diamond' Ponzi scheme that ranks as one of the worst financial frauds in North Carolina history.  Jonathan D. Davey, 48, was convicted of one count each of securities fraud conspiracy, wire fraud conspiracy, money laundering conspiracy, and tax evasion.  He could face up to fifty years in prison at sentencing if given the maximum for each charge.

According to the criminal charging document, Davey served as administrator for several of the hedge funds involved in the Black Diamond Ponzi scheme.  The scheme, masterminded by Keith Simmons, was presented to potential investors as a lucrative forex trading operation that promised risk-free annual returns exceeding 20%.  Simmons appealed to investors' faith, quoting Bible verses and stressing his devout Christianity to portray himself as trustworthy.  Over 200 investors bought Simmons' act, investing over $35 million in Black Diamond.  Many became convinced after they were provided with regular account statements purportedly showing consistent account growth.  

Over $10 million of these funds were raised by Davey through 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, Simmons, 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.  

Davey remains free on bond pending his sentencing, which has not yet been scheduled.