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Justice News

Department of Justice
U.S. Attorney’s Office
Western District of North Carolina

FOR IMMEDIATE RELEASE
Monday, June 25, 2018

Charlotte Investment Fund Operator Sentenced To 7.5 Years For Securities Fraud And Tax Evasion

CHARLOTTE, N.C. – Today, U.S. District Judge Robert J. Conrad, Jr. sentenced Richard Wyatt Davis, Jr. 41, formerly of Cornelius, N.C., to 90 months in prison and two years of supervised release for securities fraud and tax evasion, announced the U.S. Attorney’s Office for the Western District of North Carolina.    

Reginald DeMatteis, Special Agent in Charge of the United States Secret Service, Charlotte Field Office, and Matthew D. Line, Acting Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) join the U.S. Attorney’s Office in making today’s announcement.

According to filed documents and today’s court proceedings, between 2010 and February 2015, Davis defrauded approximately 75 victims of $9.3 million, by inducing them to invest in investment funds Davis controlled, such as DCG Real Assets, as well as other investments, including H2O, LLC and Basalt Exploration. According to court records, Davis recruited his victim-investors by making a series of false and fraudulent representations about where their money would be invested.  For example, Davis told investors that he would use their funds to invest in natural resources and assets such as real estate, gold mines, and water production, and touted these investments as a safe alternative to the stock market. 

In reality, Davis used investor funds to pay for administrative and overhead expenses and to repay other investors.  Davis also used some of the money to make direct and indirect payments to himself.  Court records show that Davis assured victims that their assets were growing in value despite lacking sufficient financial information to make these claims. 

According to court records, Davis generally targeted investors residing in and around Charlotte. His clients included professional athletes and individuals Davis recruited through his church. Davis also spoke at events for “preppers” and survivalists, thereby targeting victim-investors who were fearful of the stock market and the banking system. Davis preyed upon these investors’ fears of traditional financial markets and took advantage of their trust into someone who shared their religious views. Court records show that a number of Davis’s victim investors had rolled over their entire retirement savings into his funds. 

According to filed documents and today’s court proceedings, for tax years 2009 through 2012, Davis transferred more than $5 million of investor funds into bank accounts in his own name and in the names of Richard Davis Enterprises and Davis Financial, Inc.  Davis used some of these funds, as well as funds directly out of other accounts of Davis’s businesses, on personal expenditures totaling over $2 million.  However, Davis filed false tax returns for 2009 and 2011, which reflected negative total income and failed to file individual income tax returns for 2010 and 2012. 

In announcing today’s sentence, Judge Conrad said that the defendant engaged in “very significant fraudulent conduct” for a long period of time, causing harm to many and noted that he put “victims in a position from which they can never recover.” Judge Conrad emphasized the need for the sentence to reflect the seriousness of the offense, but he also considered the need to avoid unwarranted sentencing disparities.

The investigation was handled by the USSS and IRS-CI.  Assistant U.S. Attorney Jenny G. Sugar of the U.S. Attorney’s Office in Charlotte and Assistant U.S. Attorney Daniel Bradley of the U.S. Attorney’s Office in Asheville prosecuted the case.

 

Topic(s): 
Financial Fraud
Updated June 25, 2018