FOR IMMEDIATE RELEASE:
FRIDAY - May 13, 2011
PONZI SCHEMER PLEADS GUILTY
NEW BERN - United States Attorney George E.B. Holding announced that in federal court today JAMES EDWARD WHITLEY, of Greensboro, North Carolina pled guilty before Chief United States District Judge Louise W. Flanagan to wire fraud, in violation of Title 18, United States Code, Section 1343, and money laundering, in violation of Title 18, United States Code, Section 1957.
According to the Criminal Indictment, which was returned on September 15, 2010, WHITLEY, 65, represented himself as being in the “factoring” business, claiming he provided loans to businesses that needed cash for the short term, purchasing accounts receivable or holding them as security in exchange for those loans. From 2006 to 2009, WHITLEY solicited investors who lived on Bald Head Island and in Greensboro, explaining to these potential investors that he had contracts with unidentified businesses, and the investors’ funds would go directly to one of those funds, with WHITLEY receiving a small portion for commission. WHITLEY often provided a promissory note to the investor detailing a due date and interest rate. The investors understood that their money was to be invested with the company and would receive their return of capital upon the expiration of the factoring contract. Those who chose to invest with WHITLEY either wired him the funds or personally handed him a check. However, WHITLEY's promises were false. He was not using their money to invest in the favoring business. Instead, WHITLEY used the money to pay interest or principal payments to other investors. He also spent investor money on personal items, such as to purchase vehicles, pay his taxes, pay his credit card bills, travel for pleasure, pay off a construction loan of over $1,000,000.00 on his house on Bald Head Island, and to make payments to the builder. In total, WHITLEY fraudulent took over $9,000,000.00 in investor money.
At sentencing, set for the August, 2011, term of court, WHITLEY faces up to 20 years' imprisonment followed by up to three years' supervised release for the wire fraud charge and up to 10 years' imprisonment followed by up to three years' supervised release for the money laundering charge.
Investigation of this case was conducted by the Internal Revenue Service, Criminal Investigations and the Federal Bureau of Investigations. Assistant United States Attorney David Bragdon represented the government.
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