Former Police Officer Charged With $889,000 Ponzi Scheme

Jun 03, 2010, 13:18 ET from U.S. Department of Justice

CLEVELAND, June 3 /PRNewswire-USNewswire/ -- Raymond Thomas, 49, was charged with one count of mail fraud and one count of filing a false tax return, Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio, announced today. Thomas, a former resident of Mentor, Ohio, was a police officer with the Warrensville Heights Police Department. Thomas is accused of executing a Ponzi scheme that defrauded approximately 25 investors of approximately $889,000.

The criminal information alleges that from 1997 through July 2006, Thomas represented to approximately 25 investors, many of whom included Cleveland area active and retired police officers and firefighters, that he operated three legitimate companies: Strictly Stocks Investment Company Inc., JR Ventures and Adams Title Agency. The information further alleges that Thomas represented to investors that Strictly Stocks would make quarterly payments to investors from income derived from "trading only in stocks and options" and that it would provide investors with "above average fixed returns with below average risk." The information alleges further that Thomas represented to investors that he also operated JR Ventures, a trucking business that included a car and limousine service, and Adams Title Agency, a real estate management company.

The information alleges that Thomas solicited investors for one or more of his companies by representing that the companies engaged in legitimate transactions and produced legitimate income. Moreover, the information alleges that Thomas represented to investors that their money would be placed in the business of their choosing, whether that was Strictly Stocks, JR Ventures or Adams Title Agency, and that their money would not be used for any other purpose.

The information alleges further that Thomas did not invest the money as he represented. Instead, Thomas unlawfully commingled investor funds; used investor funds for unauthorized purposes, including to make Ponzi payments to previous investors; and misappropriated investor funds for his own purposes and personal use. Nevertheless, as the information alleges, Thomas sent numerous interest checks, quarterly dividend checks, and financial statements to investors.

With respect to the tax count, the information alleges that Thomas knowingly submitted a false U.S. Individual Tax Return, Form 1040, for the 2006 calendar year in that Thomas understated the amount of his total income for the year by approximately $186,414.00.

"It is particularly troubling to discover that a former law enforcement officer has committed a crime, especially given that law enforcement officers take an oath to uphold the law," said U.S. Attorney Dettelbach. "These charges allege that Thomas did more than just violate the laws he had sworn to uphold, they charge that he actually targeted the law enforcement community to sustain his Ponzi scheme."

This case is being prosecuted by Assistant U.S. Attorney Bridget M. Brennan after an investigation by the FBI's Cleveland Office and the Cleveland Office of the Internal Revenue Service, Criminal Investigation Division. The Securities and Exchange Commission, Chicago Regional Office, assisted with this investigation.

This prosecution was brought as part of President Barack Obama's Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

If convicted, Thomas's sentence will be determined by the court after a review of factors unique to this case, including his prior criminal record, if any, his role in the offense and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

An information is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.

SOURCE U.S. Department of Justice