FEDS: Former Police Officer Recruited Active-Duty and Retired Cops, Firefighters Into Ponzi Scheme, Defrauding Them Of Nearly $900,000

In yet-another action brought through the interagency Financial Fraud Enforcement Task Force (FFETF), a former police officer in a Cleveland suburb has been charged with operating a Ponzi scheme that defrauded law-enforcement colleagues and firefighters out of $889,000, federal prosecutors said.

Raymond Thomas, 49, who formerly lived in Mentor, Ohio, and served on the Warrensville Heights Police Department, also was charged with filing a false tax return that understated his income in 2006 by more than $186,000.

“It is particularly troubling to discover that a former law enforcement officer has committed a crime, especially given that law enforcement officers take an oath to uphold the law,” said U.S. Attorney Steven M. Dettelbach of the Northern District of Ohio. “These charges allege that Thomas did more than just violate the laws he had sworn to uphold, they charge that he actually targeted the law enforcement community to sustain his Ponzi scheme.”

Prosectutors alleged that Thomas told about 25 investors — many of whom included Cleveland-area active and retired police officers and firefighters — that money they invested with him would earn “above average fixed returns with below average risk.”

Thomas purported that he owned three legitimate companies — Strictly Stocks Investment Co. Inc., JR Ventures and Adams Title Agency — and that “Strictly Stocks would make quarterly payments to investors from income derived from ‘trading only in stocks and options,'” prosecutors said.

JR Ventures was described as a trucking business that included a car and limousine service, and Adams Title Agency was described as a real-estate management company, prosecutors said.

Thomas told investors that there money could be entrusted to any or all of the three companies and would be used for no other purpose than to create legitimate investment income.

But Thomas “did not invest the money as he represented,” prosecutors said. “Instead, [he] unlawfully commingled investor funds; used investor funds for unauthorized purposes, including to make Ponzi payments to previous investors; and misappropriated investor funds for his own purposes and personal use.”

Using words that have been associated with various so-called “mini-Madoffs” accused of operating smaller Ponzi schemes in the aftermath of Bernard Madoff’s $65 billion scheme, prosecutors said that “Thomas sent numerous interest checks, quarterly dividend checks, and financial statements to investors.”

President Obama formed the FFETF in November 2009.

Dettelbach’s office has brought a number of Ponzi cases recently. Last month, David Harriett, 60, of Warren, Ohio, was charged with bilking investors by telling them he built franchise restaurants for McDonald’s and Pioneer Chicken.

In March, Enrique F. Villalba, 47, of Cuyahoga Falls, was charged in a bizarre Ponzi scheme that allegedly combined the science of physics with a unique “momentum filter” that purportedly enabled him to predict how the futures market would behave with “an uncanny degree of certainty.”

The Villalba scheme was conducted from Beachwood Ohio, prosecutors said.

Villalba is a graduate of the United States Military Academy at West Point and the University of Puget Sound School of Law.

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