UPDATED 8:28 P.M. EDT (U.S.A.) Minneapolis/St. Paul has Tom Petters, accused of operating a $3.65 billion Ponzi scheme by deceiving investors into thinking they were financing his company’s purchase of electronics that later would be sold to Wal-Mart and other huge retailers.
And now Chicago has Matthew Scott, whom investigators described as a sort of Tom Petters on a smaller scale.
Scott was accused today of telling investors their funds would be used to purchase or finance the purchase of high-speed commercial printers that would be sold to third-party buyers at a profit. The machines were said to be valued in excess of $100,000, and Scott claimed his mark-up of 20 percent led to big profits, the FBI said.
Scott, 50, of Elmhust, Ill., was charged with mail fraud. His company, Gelsco, neither purchased nor financed such printers, the FBI said.
“Instead, Scott allegedly fabricated false purchase orders, invoices, promissory notes and other documents that he provided to investors,” the FBI said.
The scheme collected at least $28 million between early 2000 and March 2009 before unraveling, the FBI said. At least 60 investors were fleeced. The initial loss estimate was pegged at $4.5 million.
“Throughout the duration of the alleged scheme, Scott had to continually raise funds from investors to make payments to earlier investors, all of which he concealed and intentionally failed to disclose to new and old investors alike,” the FBI said.
Scott also duped a bank by submitting fraudulent documents to get a loan about 10 months before the scheme collapsed, the FBI said.
“In May 2008, Scott obtained a $300,000 bank loan by falsely representing that the loan would be secured by a printer that was being sold to a third party, and by providing fraudulent documents as proof of the purported sale,” the FBI said.