South Carolina Man Indicted For $1 Million Investment Scheme And Tax Evasion
CHARLOTTE, N.C. – A criminal bill of indictment was unsealed today in federal court, charging Nickolas M. Godfrey, 39, of Fort Mill, South Carolina, with securities fraud, wire fraud, and transactional money laundering in connection with a $1 million investment fraud scheme and a related tax evasion scheme, announced R. Andrew Murray, U.S. Attorney for the Western District of North Carolina.
U.S. Attorney Murray is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and Matthew D. Line, Acting Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI).
According to allegations contained in the indictment, from 2012 to at least 2015, Godfrey obtained more than $1 million by engaging in a Ponzi scheme through his company, Coast to Coast Business Funding LLC (Coast to Coast), which purportedly provided short-term cash advances to businesses. The indictment alleges that Godfrey induced at least 20 victims to invest with Coast to Coast, by falsely representing that the company was successfully generating substantial revenue. Godfrey maintained a website for Coast to Coast, which also falsely represented that the company was accredited by the Better Business Bureau. To further solicit investments from victims, Godfrey made numerous false representations to victims, including promising returns of as much as 73.5%.
Contrary to promises made to victim investors, Godfrey used victims’ money to pay for personal expenditures and for the expenses of his other businesses, and to make Ponzi-type payments to earlier victims.
When victims complained about missed payments and demanded more information, Godfrey tried to appease them by creating fake documents, including fake financial statements for Coast to Coast, and a fake list of clients to which Coast to Coast had purportedly provided financing.
In addition to the investment fraud scheme, the indictment alleges that Godfrey engaged in in a tax evasion scheme by evading the payment of tax liabilities assessed by the IRS related to his ownership and operation of two hair salons, Bliss Day Spa & Salon (Bliss) in Pineville, N.C., and Alter Ego Salon & Day Spa (Alter Ego) in Charlotte. The indictment alleges that Godfrey committed tax evasion by, among other things, failing to pay federal employment taxes that he had withheld from the paychecks of employees at Bliss and Alter Ego, and taking multiple steps to thwart the IRS’ collection efforts. For example, the indictment alleges that Godfrey commingled the amounts withheld from his employees’ paychecks with other business and personal funds, including money obtained from victim investors, and used those funds to pay for personal expenses. Godfrey also lied to IRS employees attempting to collect the unpaid taxes, according to the allegations in the indictment. In addition, as alleged in the indictment, Godfrey filed individual U.S. Federal Income Tax Returns for the years 2009 through 2012 that failed to report accurately the net income he received from his businesses.
Godfrey had his initial appearance today before U.S. Magistrate Judge David Keesler. The securities fraud charge carries a penalty of up to 20 years in prison and a $5 million fine. The wire fraud charge carries a penalty of up to 20 years in prison and a $250,000 fine. The transactional money laundering charge carries a penalty of up to 10 years in prison and a fine of up to $250,000 or not more than twice the amount of the criminally derived property involved in the transaction. The tax evasion charge carries a penalty of five years in prison and a $250,000 fine.
All charges contained in the indictment are allegations. The defendant is innocent until proven guilty beyond reasonable doubt in a court of law.
The investigation was led by the FBI and IRS-CI. Assistant United States Attorney Daniel Ryan, of the U.S. Attorney’s Office in Charlotte, is prosecuting the case.