FOR IMMEDIATE RELEASE:
Thursday - April 29, 2004
WILMINGTON - Acting United States Attorney George E. B. Holding announced that JAMES CHARLES REIVES and JACKIE DOBSON PRITCHETT were sentenced in federal court in Wilmington on Monday, April 26, 2004, for conspiring to commit mail fraud, wire fraud, and securities fraud. Senior U. S. District Judge James C. Fox sentenced REIVES to 60 months imprisonment and three years of supervised release. PRITCHETT received a sentence of 57 months imprisonment and three years of supervised release. Also, both defendants were ordered to pay restitution to their victims. REIVES was taken into custody immediately, but PRITCHETT will self-report to the United States Marshals Service at a later date.
Pursuant to plea agreements with the United States Attorney's Office, both defendants pled guilty on December 8, 2003, to a one-count Criminal Information filed on November 5, 2003.
According to the Criminal Information and evidence presented in court, 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 charged 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 REIVES spent 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.
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.
North Carolina Secretary of State Elaine Marshall said, "Investors are safer today because of the tremendous amount of cooperation between federal and state law enforcement in this case. Along with taking these two individuals off the street, these sentences should serve notice on anyone who would seek to scam investors that these are serious crimes and are going to be treated as such."
Assistant U. S. Attorney Banumathi Rangarajan prosecuted the case for the government.
News releases are available on the U. S. Attorney's web page at www.usdoj.gov/usao/nce within 48 hours of release.