CEO of Limited Liability Company Sentenced to 30 Months in Prison for Wire Fraud
CAMDEN, N.J. – The chief executive officer of a private equity investment firm was sentenced today to 30 months in prison for defrauding an investor of $1.35 million dollars, Acting U.S. Attorney Rachael A. Honig announced.
Karl James, 50, previously pleaded guilty before U.S. District Judge Joseph H. Rodriguez to an information that charged him with one count of wire fraud. Judge Rodriguez imposed the sentence today in Camden federal court.
According to documents filed in this case and statements made in court:
James was the CEO of Gore Capital LLC, which he told others was a private equity investment firm. In February 2016, James and the victim agreed to each invest approximately $1.5 million into a company that specialized in extracting and converting cannabinoids from marijuana. They further agreed to form an LCC as a conduit for their joint investment. In April 2016, James incorporated the LLC in Delaware.
On April 20, 2016, James instructed the victim to wire his investment funds into a bank account. James falsely told the victim that the victim also had access to the account. On April 22, 2016, the victim wired $500,000 into the account. On July 12, 2016, James instructed the victim to wire the remaining $1 million of his investment, which the victim did. To induce the victim’s payment, James told the victim that he would deposit his own money into the account. In reality, James never wired or deposited any of his own funds.
James later spent $1.35 million of the victim’s funds on personal and entertainment expenses for himself.
In addition to the prison term, Judge Rodriguez sentenced James to three years of supervised release and ordered him to pay $1.35 million in restitution.
Acting U.S. Attorney Honig credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney Matthew Feldman Nikic of the Cybercrime Unit in Newark.