Self-Styled Diamond And Gold Exporter Charged With Wire Fraud And Commodities Fraud
Dual U.S./Swiss Citizen Accused of Fraudulently Soliciting Millions As Part of Alleged Scheme To Export Diamonds and Gold From Africa
SAN JOSE - A federal grand jury in San Jose indicted Fritz Kramer on Thursday on charges of wire fraud and commodities fraud, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
According to the indictment, Kramer, 68, with a last known residence in Norway, solicited funds from investors, stating that their money would be invested in an export project in which Kramer would export gold and diamonds from the Democratic Republic of Congo to Europe, Asia, and the United States. Kramer told investors that they were investing in a short-term, quasi-philanthropic undertaking in which corrupt middlemen in Africa would be cut out of the gold and diamond export process, providing greater profits to African miners. Kramer promised the investors they would receive returns of up to ten times the amount of their investments in as short a time as one month.
Kramer, a dual citizen of the United States and Switzerland, used e-mail, phone calls, and Skype to communicate with investors, according to the indictment. In an effort to lull investors and keep them investing money in the scheme, Kramer frequently claimed that events had arisen that required an additional investment of funds in order for the export project to succeed. Over the years, Kramer cited, at one time or another, the following reasons for delays and the need for additional money from investors as a prerequisite to the success of the export project: (1) the need to pay for multiple urgent surgeries for a partner in the scheme, including brain and liver surgeries; (2) the loss of approximately $80,000-$90,000 in investor cash which was incinerated in a car accident; (3) a lawyer’s role in seizing approximately $95,000 cash in order to address Kramer’s unpaid legal bills; (4) the need to bribe alleged corrupt government officials in Africa; (5) the need to renew expired documents and certifications; (6) the need to pay for insurance; (7) the need to pay additional storage and shipping costs; (8) additional loan payments; and (9) taxes.
In furtherance of the scheme, Kramer also allegedly sent e-mails to investors which contained fake or altered documents as attachments. These fraudulent documents included falsified or altered versions of government certificates from the Democratic Republic of Congo pertaining to shipments of gold and diamonds, diamond certification documents purporting to be affiliated with an international diamond certification process Kramer described as the “Kimberley process,” and invoices for purported gold and diamond shipments. Kramer represented these fraudulent documents as official documents he received from government agencies, organizations and private companies in Africa and elsewhere. The fraudulent documents allegedly lulled investors into believing that the export project was legitimate, and provided a basis for Kramer’s ongoing requests for additional investments in the program. Kramer also sent e-mails to investors discussing a Kimberley process for the certification of gold, when in truth and fact, no such certification process existed. Kramer directed investors to send cash via Western Union and MoneyGram to financial institutions in Tanzania, South Africa, Zambia, and Zimbabwe. Kramer also instructed investors to send cash to Kramer in Switzerland via Western Union, and in Kenya via MoneyGram. As Kramer well knew, the funds provided by investors were not being used to develop an actual gold and diamond export project, and Kramer and his associates never intended to provide any return on the money that they obtained from investors.
To date, at Kramer’s direction, approximately 40 different investors have sent approximately $11 million to bank accounts associated with the export project. No investor has received any return on their investment.
The indictment charges Kramer with eleven counts of wire fraud, in violation of 18 U.S.C. § 1343, and one count of commodities fraud, in violation of 18 U.S.C. § 1348. Kramer was arrested on July 6, 2016, and made his initial appearance in federal court in San Jose on July 21, 2016. Kramer is currently detained. Kramer’s next scheduled appearance is on August 22, 2016, before the Honorable Edward J. Davila, U.S. District Court Judge.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of violating 18 U.S.C. § 1343, the defendant faces a maximum sentence of 20 years’ imprisonment for each count, and a fine of $250,000, plus restitution. If convicted of violating 18 U.S.C. § 1348, the defendant faces a maximum sentence of 25 years’ imprisonment, and a fine of $250,000, plus restitution. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Jeff Nedrow is prosecuting the case with the assistance of Susan Kreider. The prosecution is the result of an investigation by the FBI.