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Black Diamond Ponzi Scheme

Three more members of the infamous Black Diamond Ponzi Scheme were sentenced to prison and ordered to pay millions in restitution to victims. Within the Ponzi scheme, the members claimed that they were a legitimate hedge fund operating in North Carolina, and it came crashing down in 2012 after the operation lost over $40 million in investors’ money. Prosecutors claim that approximately 400 victims were involved. One quarter of the investors were over the age of 75, and U.S. authorities are increasing their focus on elderly financial abuse.

Specifics of the Ponzi Scheme

Investors were lured by promises of up to 137 percent returns by Davey and his cohorts, who promised due diligence had been performed on Black Diamond. Black Diamond claimed special access to banks involved in foreign currency exchange, a form of investing made famous by billionaire business magnate Warren Buffett. Most of those investors were investing their life savings into the hedge fund that published a website displaying the fake returns. The website showed investors that the company had $120 million in its accounts, when in reality less than $1 million remained in the accounts. The rest of the money collected went to the founder and promoters that were spread across several states.

Jonathan Davey used an offshore account in Belize to launder investors’ money and to fund his personal consumption, including a mansion in Ohio. Other promoters indicted include the architect of the scheme, Keith Simmons, whose activity was detected after CommunityONE Bank was cited for failing to implement an effective anti-money laundering program. The bank’s records included transactions that should have triggered a Suspicious Activity Report (SAR) for review by American authorities, including those of Simmons. The bank agreed to pay over $400,000 to the victims of the Ponzi scheme that was operated through accounts maintained at the bank.

Florida Ponzi Scheme “Lieutenants”

On September 3rd, 2014, three of Simmons “lieutenants” were sentenced. The three individuals, Jeffrey Toft, Chad Sloat, and Michael Murphy, were sentenced to lengthy prison terms and ordered to make restitution payments. Sloat, a Kansas City, Missouri resident, received 70 months in prison and was ordered to pay over $3.7 million in restitution. Murphy, a Minnesota resident, received 48 months in prison and is ordered to pay over $2.5 million in restitution.

In November 2012, Jeffrey Toft pled guilty to conspiracy to commit securities fraud and wire fraud, and conspiracy to commit money laundering. Toft was sentenced to 66 months in federal prison and ordered to repay the $2,172,666 in investor money he collected as part of the scheme. Originally, a South Dakota resident, Toft, now 51 years old, operated out of Oviedo, Florida.

If you believe you are a victim of securities fraud or a Ponzi scheme such as Black Diamond, an experienced securities law attorney can fight for restitution on your behalf. If you invested money with Jeffrey Toft or with any individual representing Black Diamond, contact attorney Boca Raton based Gregory Tendrich, P.A. to discuss your options for obtaining restitution.

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