News and Press Releases

Former North Carolina Resident Sentenced To Ten Years In Prison For Money Laundering Conspiracy

FOR IMMEDIATE RELEASE
March 12, 2013

United States Attorney Anne M. Tompkins Western District of North Carolina

Defendant ordered to pay more than $31 million in restitution for his role in the Queen Shoals Ponzi scheme

CHARLOTTE, N.C. – A former North Carolina resident was sentenced today in U.S. District Court for his involvement in the $32.5 million Queen Shoals Ponzi scheme, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Chief U.S. District Judge Robert J. Conrad, Jr. sentenced Gary D. Martin, 61, of St. Augustine, Fla. to 10 years in prison to be followed by two years of supervised release. Judge Conrad also ordered the defendant to pay $31,707,038 as restitution to the victims of the Ponzi scheme and ordered defendant liable to forfeit and repay the Government for the approximate $28,500,000 in proceeds of the scheme.

Joining U.S. Attorney Tompkins in making today’s announcement are Roger A. Coe, Acting Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and the North Carolina Secretary of State Elaine F. Marshall.

In February 2012, Martin pleaded guilty to one count of a money laundering conspiracy in connection with the Queen Shoals Ponzi scheme. According to court documents and court proceedings, on or about December 2007, Martin formed Queen Shoals Consultants, LLC (QSC) in North Carolina. Martin and others induced victims to invest over $28.5 million in the Queen Shoals Ponzi scheme operated by Sidney Hanson. Court records show that although Hanson never directly told Martin that Queen Shoals was a Ponzi scheme, Martin induced victims to invest in the Queen Shoals Ponzi scheme through a series of false and fraudulent representations. Specifically, Martin falsely claimed that QSC had over 20 years’ experience in financial services and international finance and that he had a vast background in financial services, including the silver, gold and foreign currency trading markets. In fact, Martin had no such experience, held no professional licenses related to finance or investments and had never engaged in any silver, gold or foreign currency trading.

According to court documents, Martin, through the QSC web site and other means, also made false claims about QSC’s financial expertise in “Self-Directed IRA Strategies and Fixed Rate Accounts.” Martin held QSC out as “leaders in Professional Private Placement Retirement Planning” and falsely claimed that QSC had a “proven method of diversification [that] spreads the risk nicely for a balanced portfolio,” when, in fact, QSC offered no such diversification and funneled victim funds solely into the Queen Shoals Ponzi scheme. Court records show that Martin routinely vouched for the success and reliability of Queen Shoals by claiming to have personally invested a significant amount of his own money into Queen Shoals when, in fact, Martin personally invested only $4,000.

According to filed documents and today’s sentencing hearing, Martin engaged in money laundering transactions by utilizing the referral fees he received from Hanson to pay commissions to himself and the so-called QSC consultants. From in or about 2007 to in or about 2009, Martin received over $1.9 million in referral fees from Hanson and paid the consultants over $1.5 million during the relevant time period in return for inducing victims to invest in the Queen Shoals Ponzi scheme. These payments caused QSC consultants to induce additional victims to invest in the Queen Shoals Ponzi scheme, thereby perpetuating the scheme.

In announcing today’s sentence, Judge Conrad described the impact of the Ponzi scheme on the victims. “This Ponzi scheme had devastating results,” Judge Conrad said. “People in their 60’s, 70’s, 80’s and even 90’s lost everything because Hanson and Martin defrauded them.” Judge Conrad also noted that Martin, “went into homes, got people to rely on him and told them things that weren’t true, and based on false representations, many lost their life savings…He is seriously culpable.”

Martin was released on bond and was ordered to self-report to the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.

Sidney Hanson, the mastermind of the Queen Shoals Ponzi scheme, was convicted of securities fraud and wire fraud and is currently serving a 22-year federal sentence. He was also ordered to pay over $31,000,000 in restitution. To date, over $9,000,000 has been paid to the Clerk of Court to pay victims of the Ponzi scheme. In addition, other assets, including federally forfeited precious metals and federally forfeited real estate, will be liquidated and the net sale proceeds will be paid to victims.

U.S. Attorney Tompkins thanked the Justice Department’s Asset Forfeiture and Money Laundering Section, the CFTC, and the North Carolina Secretary of State for their invaluable assistance in recovering assets, thereby ensuring that Hanson’s victims receive restitution money owed to them. U.S. Attorney Tompkins commended the quick asset seizures before the collapse of Queen Shoals, which will result in the return of nearly 30 percent of victims’ losses. The U.S. District Court has begun issuing restitution payments of the recovered funds to identified victims of the Ponzi scheme.

Martin’s case was investigated by the FBI with assistance from the Securities Division of the North Carolina Department of the Secretary of State. U.S. Attorney Tompkins also acknowledged the invaluable assistance provided by the Commodities Futures Trading Commission and the Florida Office of Financial Regulation, Bureau of Financial Investigations in this case. The prosecution is handled by Assistant United States Attorney Mark T. Odulio, of the U.S. Attorney’s Office in Charlotte.


 

 

 

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