A Tennessee investment advisor has agreed to plead guilty to embezzling more than $10 million in what appears to be the first fraud case related to the bailout.
Gordon B. Grigg accepted responsibility for four counts of mail fraud and four counts of wire fraud. The crimes, which prosecutors said constituted a Ponzi scheme, involved the purported purchase of government debt instruments issued by the Troubled Asset Relief Program.
United States Attorney Ed Yarbrough and Neil M. Barofsky, the inspector general of the bailout program, made the announcement of the indictment and plea deal yesterday. Barofsky, in a report to Congress earlier this week, said his office had opened 20 criminal investigations involving the TARP program.
In a Ponzi scheme, the organizer offers investors large returns but typically does not invest the money he receives. Instead, he uses capital from later investors to pay off earlier ones, thus creating the illusion that his investments are successful.
According to prosecutors, Grigg held himself out as an investment advisor and personal coach, offering clients the chance to invest in "pooled client purchases of fixed-term certificates of deposit, private placements, corporate notes and debentures."
In the plea agreement, Grigg admitted that he solicited clients for his company, ProTrust Management Inc., by telling them he would place their money in government-backed commercial debt related to the bailout program.
Grigg "falsely represented to investors that he had already committed more than $5 million in ProTrust pooled client funds towards the purchase of TARP-guaranteed debt as part of a private placement partnership between ProTrust and the investment firms Berkshire Hathaway Inc. and Kohlberg Kravis Roberts & Co.," the Justice Department said.
In order to maintain the illusion, he used counterfeit corporate letterheads and the forged signatures of executives at the investment firms to create fictitious documents and correspondence that supported his claims.
Federal prosecutors said that Grigg's crimes date back to 1990. According to the indictment, he solicited a total of approximately 60 people to invest $10.9 million dollars with him. Although he never invested the money as promised, he did return approximately $6.6 million to investors as supposed gains.
His profit, and the loss to the investors, totaled $4.9 million. He faces up to eight years in prison.
Gordon B. Grigg accepted responsibility for four counts of mail fraud and four counts of wire fraud. The crimes, which prosecutors said constituted a Ponzi scheme, involved the purported purchase of government debt instruments issued by the Troubled Asset Relief Program.
United States Attorney Ed Yarbrough and Neil M. Barofsky, the inspector general of the bailout program, made the announcement of the indictment and plea deal yesterday. Barofsky, in a report to Congress earlier this week, said his office had opened 20 criminal investigations involving the TARP program.
In a Ponzi scheme, the organizer offers investors large returns but typically does not invest the money he receives. Instead, he uses capital from later investors to pay off earlier ones, thus creating the illusion that his investments are successful.
According to prosecutors, Grigg held himself out as an investment advisor and personal coach, offering clients the chance to invest in "pooled client purchases of fixed-term certificates of deposit, private placements, corporate notes and debentures."
In the plea agreement, Grigg admitted that he solicited clients for his company, ProTrust Management Inc., by telling them he would place their money in government-backed commercial debt related to the bailout program.
Grigg "falsely represented to investors that he had already committed more than $5 million in ProTrust pooled client funds towards the purchase of TARP-guaranteed debt as part of a private placement partnership between ProTrust and the investment firms Berkshire Hathaway Inc. and Kohlberg Kravis Roberts & Co.," the Justice Department said.
In order to maintain the illusion, he used counterfeit corporate letterheads and the forged signatures of executives at the investment firms to create fictitious documents and correspondence that supported his claims.
Federal prosecutors said that Grigg's crimes date back to 1990. According to the indictment, he solicited a total of approximately 60 people to invest $10.9 million dollars with him. Although he never invested the money as promised, he did return approximately $6.6 million to investors as supposed gains.
His profit, and the loss to the investors, totaled $4.9 million. He faces up to eight years in prison.
published April 23, 2009, 0 Comments
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