Owner Of G3 Capital Management Sentenced To 96 Months In Prison For Defrauding Investors Of Over $1.5 Million
– Judge orders $1.6 million in restitution to victims
– Investor money used for shopping, traveling and gambling
OWENSBORO, Ky. – The owner of G3 Capital Management was sentenced today in United States District Court by Chief U.S. Judge Joseph H. McKinley, Jr. to eight years in prison and ordered to pay $1.6 million in restitution to victims for devising a scheme to defraud investors from Florida, Texas and Kentucky of more than $1.5 million announced David J. Hale, United States Attorney for the Western District of Kentucky.
Judge McKinley further ordered defendant Cory B. George, 28, of Owensboro, Kentucky, to forfeit contents from three bank accounts seized by the United States during the investigation. Seized funds include $100,301.60 held by Dorman Trading, Chicago, Illinois, in the name of G3 Capital Management; $13,555.18 held by MF Global Trading, Chicago, Illinois, in the name of G3 Capital Management; and $370,334.77 held by the People’s Bank, Marion County, Kentucky in the name of G3 Capital Management. The forfeited funds will be applied to the final restitution order to restore to the victims some of the losses they sustained as a result of George’s fraudulent scheme.
George pled guilty to all eleven counts of a superseding indictment, on March 27, 2012 in U.S. District Court. According to the plea agreement, George admits that between December 15, 2009, and April 27, 2011, he defrauded investors of more than $1.5 million. George admitted that he falsely advertised to potential investors Certificates of Deposit, guaranteed by the Securities Investor Protection Corporation (SIPC). George falsely claimed that SIPC provides account insurance equivalent to FDIC insurance. Monies received by George from investors were not actually invested in Certificates of Deposit; instead, investor funds were used by George for trading in the commodities market or used by George for personal expenses such as shopping, traveling, and gambling.
“My office is committed to vigorously prosecuting investor fraud crimes, and we will continue to seek restitution for these victims,” stated U.S. Attorney David J. Hale. “Cory George financially devastated a number of elderly victims with the especially devious lie that he could offer what no legitimate financial institution could: above-market rates in a government-insured certificate of deposit. Investors are urged to thoroughly check any such claims offered by questionable promoters. Those who would perpetrate such frauds should know that regulators and federal law enforcement officers will work tirelessly to shut down sham investment schemes and prosecute those responsible.”
At his change of plea hearing, George admitted to incorporating G3 Capital Management, with its principal place of business in Owensboro, Kentucky, in December 2009, and setting up business offices in Palm Beach, Florida, and Houston, Texas. George ran advertisements in local newspapers offering short term Certificates of Deposit paying from 3-5% interest and represented that investors’ deposits would be guaranteed by G3 Capital Management. However, G3 Capital was not a federally insured financial institution, and was not authorized to issue Certificates of Deposit. G3 Capital Management and Cory George were also not members of the Securities Investor Protection Corporation, and SIPC would not have covered George’s investment activities with any guarantee. The superseding indictment charged George with eleven counts of mail fraud, in connection with fraudulent G3 Certificates of Deposit that George created and sent to investors either by U.S. mail or by Federal Express. Other mail fraud counts relate to investor checks that were sent interstate from Texas to George’s Owensboro office where they were deposited into a bank account George had opened in the name of G3 Capital Management at a bank located in Marion County, Kentucky. Finally, two counts of the superseding indictment relate to small interest payments that were mailed by George to a Kentucky investor. Most of the victims who purchased Certificates of Deposit from George and G3 Capital Management never received back their investments.
“The Florida Office of Financial Regulation does not tolerate scams that jeopardize investors’ hard-earned money, and we are thankful for this multi-state effort that will keep George behind bars,” said OFR Interim Commissioner Linda B. Charity. “All consumers and investors should research the financial products and people they are conducting business with and file a complaint if you feel you have been victimized by financial fraud.”
George was arrested in Las Vegas, Nevada, on a Criminal Complaint that was filed in United States District Court on May 11, 2011, and was taken in to the custody of the United States Marshals Service. George remains in federal custody.
This case was prosecuted by Assistant United States Attorney Marisa Ford and was investigated by the FBI in Owensboro, Kentucky, and the Florida Office of Financial Regulation in West Palm Beach, Florida.