A Virginia man and former pastor entered a guilty plea to charges that he operated a Ponzi scheme under the guise of a legitimate jewelry business. Matthew James Addy, 34, of Lancaster, Pennsylvania, pled guilty to a single charge of securities fraud, which carries a maximum sentence of up to twenty years in prison. His jewelry store, LaPorte Jewelers, has since shut down.
After serving as a youth pastor in Scotland for several years, Addy founded wholesaler Edward J. & Co, which also operated LaPorte Jewelers ("LaPorte"). Beginning in 2010, Addy began seeking investors for what he described as the purchase and resale of wholesale jewelry and loose precious stones. In exchange for their investments, individuals were given promissory notes carrying above-average rates of interest that purportedly were linked to specific jewelry transactions entered into by Addy. In seeking investors, Addy relied on his affiliations with various religious organizations, and a majority of the 40-plus total investors were recruited from these groups. In all, Addy raised more than $3 million.
However, according to the FBI and as admitted by Addy, LaPorte was nothing more than a front for an elaborate Ponzi scheme that used investor funds to make Ponzi-style payments and for a variety of other unauthorized uses. When LaPorte originally closed down in June 2012, Addy blamed the store's bad fortunes on mounting monthly losses due to declining revenues.
Addy is scheduled to be sentenced on May 10, 2013.