Former FBI Agent and Wife Convicted for Investment Fraud Scheme
RICHMOND, Va. – A former FBI Special Agent and his wife were convicted today by a federal jury of devising and participating in a scheme to defraud investment advisory clients.
U.S. Attorney for the Eastern District of Virginia Neil H. MacBride; Assistant Attorney General Lanny Breuer of the Justice Department’s Criminal Division; Michael F. A. Morehart, Special Agent in Charge of the FBI’s Richmond Field Office; and Keith A. Fixel, Inspector in Charge of the Charlotte Division of the United States Postal Inspection Service, made the announcement.
John Robert “Bob” Graves, 52, and Sara Turberville Graves, 44, both of Fredericksburg, Va., were convicted of conspiracy to commit mail and wire fraud, mail fraud, and four counts of wire fraud. John Graves was also convicted of three counts of Investment Advisers Act Fraud and one count of making false statements to the Federal Bureau of Investigation.
“The Graves targeted elderly investors in central Virginia and through lies and manipulation stole more than $1 million,” said U.S. Attorney MacBride. “It’s despicable that a former FBI agent and certified financial planner would rip off these investors to pay his own bills and fund his lifestyle.”
“Mr. Graves, a former FBI Special Agent, and his wife lured senior citizens and others into thinking that their money would be safe with them,” said Assistant Attorney General Breuer. “In fact, they were using investor funds for personal expenses and to keep their scheme going. Today’s verdicts reflect the seriousness of these crimes, and carry the prospect of substantial prison time.”
The Graves face a maximum penalty of 20 years in prison and a $250,000 fine, or twice the amount of the victim’s losses, on each of the conspiracy and fraud counts, and John Graves faces a maximum of five years on the Investment Advisers Act Fraud and false statements. Sentencing has been scheduled for July 31, 2012.
John and Sara Graves were indicted on October 4, 2011. According to the evidence presented at trial, John Graves, who is a former Special Agent with the Federal Bureau of Investigation, founded and served as president of Brooke Point Management (BPM), a corporation through which he sold insurance, performed estate and tax planning services and recruited and advised investment clients. He was also a registered investment adviser representative with, and CEO of, Compass Financial Advisers, an Indiana based registered investment advisory firm. He was a Certified Financial Planner and held numerous securities industry registrations, including the Series 7 and Series 65 registrations. Sara Graves served as secretary of Brooke Point Management and managing member of Dupont Auburn Real Estate, an Indiana limited liability company. Between approximately June 2008 and July 2011, John and Sara Graves devised and executed a scheme to defraud approximately 11 investors located in central Virginia of approximately $1,300,000.
According to the evidence, John and Sara Graves raised investor funds by selling investments in Brooke Point Management and Dupont Auburn Real Estate through misrepresentations about the safety and security of the investments, as well as misrepresentations and omissions regarding their intended use of investor money. According to the evidence presented at trial, John and Sara Graves used investor funds to, among other things, pay back previous investors who requested access to their money, purchase real estate in Partlow, Virginia, which was ultimately titled in Sara Graves’ name, to pay personal expenses, including credit card bills and time share dues, and to pay for John Graves’ personal acquisition of Compass Financial Advisers. John Graves continued to make misrepresentations even after the scheme was uncovered, through false and misleading filings in United States Bankruptcy Court and false and misleading statements to the investors and to investigators from the U.S. Securities and Exchange Commission, FBI and U.S. Postal Inspection Service.
The case is being prosecuted by Trial Attorney Kevin B. Muhlendorf of the Fraud Section in the Justice Department’s Criminal Division and Assistant U.S. Attorneys Jamie L. Mickelson and Michael R. Gill of the Eastern District of Virginia.This case was investigated by the FBI and the U.S. Postal Inspection Service. The case was referred for criminal prosecution by the U.S. Securities and Exchange Commission.