Wholesale Jewelry Distributor Sentenced in Multi-Million Dollar Fraud Scheme
PROVIDENCE – A Rhode Island jewelry distributor who admitted to orchestrating a long-running fraud scheme that defrauded a debtor finance company of more than $3.6 million dollars was sentenced on Monday to 48 months in federal prison.
Gerald Kent, 52, of Groton, CT, owner and operator of Kent Jewelry, formerly located in Johnston, RI, admitted that he executed a fraud scheme while selling his company’s jewelry on the Internet, primarily using websites such as Groupon.com and Zulily.com.
Kent was also ordered to serve 3 years supervised release upon completion of his term of incarceration and to pay restitution in the amount of $3,609,228.13. Kent pled guilty on December 20, 2017, to one count each of wire fraud and aggravated identity theft.
The U.S. Sentencing Guidelines imprisonment range in this matter is 63-78 months, with an additional sentence of 24 months as to the charge of aggravated identity theft. Pursuant to a Plea Agreement filed in this matter, the government recommended the court impose a sentence of 60 months in incarceration.
The sentence, imposed by U.S. District Court Chief Judge William E. Smith, is announced by United States Attorney Stephen G. Dambruch, Resident Agent in Charge of the Providence Office of the U.S. Secret Service Brian Deck, and Special Agent in Charge of the Federal Bureau of Investigation Boston Division Harold H. Shaw.
At the time of his guilty plea, Kent admitted to the Court that he submitted fraudulent invoices to a factoring (debtor finance) company based in Chicago, Ill., mostly from Groupon and Zulily, which resulted in payments to him of nearly $5 million dollars. Kent admitted that he created hundreds of fraudulent invoices which were submitted to the factoring company for which he received payment; created and used a fraudulent clone of Groupon, Inc.’s website; enlisted coconspirators to pose as Groupon employees; and opened bank accounts in the names of Groupon and Zulily, Inc., in order to deceive the debtor finance company into believing it was receiving payments from these companies.
Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. Factoring companies work with businesses to provide working capital in order to grow their businesses without having to wait for outstanding accounts receivables to be paid.
The case was prosecuted by Assistant U.S. Attorneys Lee H. Vilker and John P. McAdams.
The matter was investigated by the United States Secret Service and the Federal Bureau of Investigation.