On Feb. 22, jeweler Matthew James Addy, 34, of Lancaster, Pa., pleaded guilty to running a multimillion dollar Ponzi scheme involving jewelry and precious stones, an FBI statement said.
Addy, the owner of wholesaler Edward J. & Co., which operated a now-closed retail jewelry store in Lancaster, Pa., known as LaPorte Jewelers, copped to a charge of securities fraud. The FBI says that, beginning in 2010, he allegedly recruited 40 investors, many from religious groups, to put $3 million behind promissory notes linked to jewelry and gemstone transactions.
However, the FBI charges, Addy never conducted the transactions and used the funds for business and personal expenses. While $670,000 was reportedly paid back out to investors, most of the payouts came directly from funds contributed by new investors, the FBI says, making them qualify as Ponzi payments.
Addy faces a maximum penalty of 20 years in prison at his sentencing on May 10. His attorney could not be reached for comment.