Former Henrico County Police Officer Sentenced to 121 Months for $10 Million Investment Scheme
RICHMOND, Va. - Donald C. Lacey, 43, of Richmond, Va., was sentenced today to 121 months in prison, followed by 3 years of supervised release, for carrying out an investment and Ponzi scheme that stole more than $10 million from more than 100 victims.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Michael F.A. Morehart, Special Agent in Charge of the FBI’s Richmond Field Office; Keith Fixel, Postal Inspector in Charge, United States Postal Inspection Service, Charlotte Division; and Rebecca Sparkman, Special Agent in Charge, IRS Criminal Investigation, Washington DC Field Office, made the announcement of the sentencing by United States District Judge Henry E. Hudson.
“Investors trusted Donald Lacey because of his reputation as a former police officer, and they never suspected he would steal their money,” said U.S. Attorney MacBride. “They gave him millions believing they were not only investing for themselves but also improving the city. Mr. Lacey, with no concern for the hardship or pain of the innocent investors, used the money for his own selfish purposes.”
“The U.S. Postal Inspection Service thoroughly investigates cases like this which involve defrauding citizens via the mail,” said Keith Fixel, Postal Inspector in Charge. “We constantly strive to protect our customers and the public from falling victim to Ponzi and other investment fraud schemes that claim billions of dollars every year.”
“Promoters of Ponzi schemes prey upon trusting investors and then steal their hard earned money. Investors should be wary that programs promising unbelievable returns on investment should be looked at carefully," said Special Agent in Charge Rebecca Sparkman. "Remember the old cliché, 'If it's too good to be true, it probably is.'”
Court documents show that in October 2006, Lacey formed Capital Funding & Consulting, L.L.C. (“CFC”), headquartered in Henrico County, and promoted CFC as a private real estate lending company that provided short-term loans to qualified borrowers for various real estate projects. Through various means, including a PowerPoint presentation and a website, Lacey solicited individuals to invest in CFC, promising them a 12.5% rate of return on their investments derived from the loans made to the borrowers.
When Lacey plead guilty on March 15, 2010, he acknowledged that he failed to provide material information to potential investors, including: CFC was loaning a significant majority of its funds to entities under Lacey’s control; virtually all of the transactions between CFC and entities under Lacey’s control were channeled through Hermitage Realty, Lacey’s real estate firm; and Lacey used CFC funds to pay agents at Hermitage Realty inflated commissions as an incentive to find properties for Lacey’s other companies. From October 2006, through November 2008, more than 200 investors invested well over $9 million with CFC.
Lacey also acknowledged that, unbeknownst to CFC investors, he caused the transfer of the majority of CFC funds to his other investment companies – entities under Lacey’s complete and sole control. Once funds were loaned or otherwise disbursed to his companies, Lacey utilized those funds in a manner inconsistent with the representations he made to investors. Only a relatively small portion of the funds were actually used to rehabilitate the properties for which the funds were borrowed. In fact, from October 2006 until November 2008, over $5,000,000 of investor funds transferred to the investment companies was further transferred to another company to pay pre-existing debt-service on properties with no connection to CFC; and during that same time period, over $1,000,000 of the investor funds transferred to the investment companies was further transferred to Lacey’s personal accounts and used for personal and business expenses unrelated to CFC. Lacey also transferred funds directly from CFC’s Escrow account into his own personal accounts and used those funds for personal and business expenses unrelated to CFC. The combined loss to the victims is more than $10 million.
This case was investigated by the FBI, the Internal Revenue Service Criminal Investigation, the United States Postal Inspection Service in Richmond, the State Corporation Commission, the Virginia State Police, Henrico County Police, and the National White Collar Crime Center. Assistant United States Attorney Michael R. Gill and former Assistant United States Attorney John Adams prosecuted the case on behalf of the United States.A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.usdoj.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on http://pacer.uspci.uscourts.gov.