FOR IMMEDIATE RELEASE:
Monday - December 8, 2003
WILMINGTON - United States Attorney Frank D. Whitney announced that JAMES CHARLES REIVES and JACKIE DOBSON PRITCHETT pled guilty in federal court in Wilmington on Monday, December 8, 2003, to conspiring to commit mail fraud, wire fraud, and securities fraud. Both defendants were charged in a one-count Criminal Information filed on November 5, 2003, and entered their guilty pleas pursuant to plea agreements with the United States Attorney's Office.
Senior U. S. District Judge James C. Fox accepted the pleas and scheduled sentencing for March 15, 2004, in Wilmington. REIVESand PRITCHETT each could receive a maximum sentence of five years imprisonment, a fine of $250,000.00, and a supervised release term of three years. Also, the defendants will be ordered to pay restitution to their victims in an amount to be determined by the court. (Note: By statute, restitution is mandatory to victims of certain crimes.)
According to the Criminal Information, JAMES CHARLES REIVES, 52, of Raleigh, N. C., was the co-founder and one of two general partners of Tri-Star Investment Group, LLC. In that capacity, he marketed "high yield" investment opportunities to potential investors around the United States. Further, he conducted sales seminars, managed investor monies, and communicated directly with investors and sales agents known as "facilitators." Also, he purported to run businesses under the names of Walden International, Inc., and Isle of Kent Investments.
JACKIE DOBSON PRITCHETT, 40, of Ellijay, Georgia, was the office manager for Tri-Star. She processed investor paperwork, deposited and disbursed investor funds, prepared and mailed account statements and other correspondence to investors and facilitators, and addressed account errors. Further, according to the Criminal Information, she balanced at least some of Tri-Star's bank accounts and kept records for at least two bank accounts.
The Criminal Information alleges that
between November 1997 and December 2000, REIVES and PRITCHETT
conspired with other persons to engage in a prime bank investment scheme
whereby they stole $16,675,000.00 from more than 900 victims in 37 states.
REIVES and an unindicted co-conspirator set up an investment
club, Tri-Star Investment Group. Although incorporated in North Carolina,
Tri-Star maintained offices in North Carolina, Georgia, and Texas. PRITCHETT
was hired to be an office manager for the Georgia office; REIVES
handled the Raleigh office; and the unindicted co-conspirator handled
the Texas office.
Through Tri-Star, the defendants solicited monies from investors in $10,000.00 increments and told them that the monies would be pooled and invested in off-shore bank accounts, which would produce 20% per month returns for each investor. The defendants expanded the scheme to insulate themselves by creating sales persons, known as "facilitators," who received a commission for each new investor brought into the club.
Rather than investing the monies, the conspirators implemented a "ponzi" scheme, in which they paid investors a "return" on their investments from the funds which those and other investors had invested. The conspirators lulled investors into a sense of security by the issuance of monthly account statements known to be false, and which regularly showed earned "interest" of 20% per month after a 90-day waiting period. In addition, after the North Carolina Securities Division notified the conspirators of an investigation in June 1999, the co-conspirators repeatedly gave investors false and misleading information about the nature of the investigation in order to lull investors into inaction and to prevent further investigation of the scheme.
The "ponzi" scheme eventually collapsed, but not before REIVESspent more than $2 million on himself and others. Some of the items he purchased included three Mercedes automobiles, a Ford Expedition, and a Ducati motorcycle--all now subject to forfeiture to the government.
U. S. Attorney Whitney stated, "I commend the agents and prosecutor for their hard work unraveling a complex criminal enterprise. This sends a strong message to those who perpetrate financial crimes."
North Carolina Secretary of State Elaine Marshall added, "Making this case happen took a tremendous partnership between federal and state law enforcement."
Investigation of the case was conducted by the Federal Bureau of Investigation and the Securities Division of the N. C. Department of the Secretary of State. Assistant U. S. Attorney Banumathi Rangarajan is handling the case for the government.