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Tag: Jonathan D. Davey

  • NORTH CAROLINA: Jonathan Davey, Figure In Infamous ‘Black Diamond’ And ‘Divine Circulation Services’ Ponzi And Fraud Caper, Convicted On All Counts; Jury Returned Verdicts In 45 Minutes

    breakingnews72UPDATED 7:08 P.M. ET (U.S.A.) Jonathan D. Davey, a Newark, Ohio, certified public accountant and purported hedge-fund manager, has been convicted of all four counts against him in the “Black Diamond” and “Divine Circulation Services” Ponzi and fraud schemes in the Western District of North Carolina.

    A federal jury, according to prosecutors, took only 45 minutes to return four guilty verdicts against Davey, 48. Ten defendants previously were convicted for their roles in the fraud, and CommunityOne Bank was charged criminally. Davey, who was convicted of conspiracy to commit securities fraud, conspiracy to commit wire fraud, conspiracy to commit money-laundering and tax evasion, potentially faces decades in federal prison.

    Davey was charged last year.

    In a statement, prosecutors said Davey “used an elaborate network of shell companies to evade taxes and commit money laundering with the proceeds of the Ponzi scheme. In particular, Davey used an offshore shell company in Belize to funnel money to build a mansion in Ohio, creating a sham ‘loan’ by pretending that investors had ‘loaned’ investment money to the Belizean shell company that was then used to build Davey’s personal mansion.

    Black Diamond principal Keith F. Simmons was sentenced in 2012 to 50 years in prison.

    See statement by the office of U.S. Attorney Anne M. Tompkins.

  • BULLETIN: 4 More Indictments In Alleged North Carolina Ponzi Caper; New Charges Follow On Heels Of 7 Previous Convictions And Criminal Allegations That Bank Turned A Blind Eye To Fraud Scheme

    BULLETIN: With seven defendants already convicted of Ponzi-related crimes and a North Carolina bank accused of turning a blind eye to the fraud, four new criminal defendants have been named in the Black Diamond Capital Solutions probe.

    A federal grand jury in Charlotte has returned an indictment against Jonathan D. Davey, 47, of Newark, Ohio; Jeffrey M. Toft, 49, of Oviedo, Fla.;  Chad A. Sloat, 33, of Kansas City, Mo.; and Michael J. Murphy, 51, of Deep Haven, Minn., the office of U.S. Attorney Anne M. Tompkins of the Western District of North Carolina said.

    It was a case that married a conspiracy to a series of lies and ultimately was unraveled by the FBI and the IRS, prosecutors said. Among the key new allegations is that a second Ponzi scheme emerged to replace one that had collapsed earlier.

    Davey, a CPA, organized a Belize company known as Divine Circulation Services Ltd. that assisted now-convicted Black Diamond felon Keith F. Simmons in pulling off the $40 million scam, according to federal records.

    Other corporate entities identified in a 2011 CFTC civil complaint as having links to the alleged scam also used names that conjured images of religion and safety. Davey also was at the helm of a Belize firm known as Sovereign Grace Inc., a firm that benefited from the scam, the CFTC said last year.

    “The indictment also charges Davey with tax evasion for claiming to the IRS on his 2008 tax return that $810,000 that Davey stole from victims was a ‘loan,’” federal prosecutors said today. “In reality, the indictment charges, Davey stole that $810,000, plus approximately $500,000 in 2009, from victims to build Davey’s personal mansion.”

    All four of the new criminal defendants are charged with conspiracy to commit securities fraud, conspiracy to commit wire fraud and conspiracy to commit money-laundering, prosecutors said.

    Elements of the case as outlined in the CFTC’s civil complaint last year read like a work of impossible fiction. Regulators and other law-enforcement agencies increasingly have been squaring off against bizarre fraud schemes that seek to mask themselves behind shell companies both domestic and offshore. The schemes often feature appeals to greed and faith, amid claims of fantastic earnings.

    Read the announcement about the new indictments on the FBI website, which also lists the names of individuals already convicted in the scheme.