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Yet Another Classic Ponzi Scheme

Yet Another Classic Ponzi Scheme

By Scott Starr

Attached below is an article that recently appeared on Law360.com, authored by Dean Seal, which describes another classic Ponzi scheme in a small Tennessee town of approximately 5,000 residents, Sparta, Tennessee. The Ponzi schemer scammed his friends, relatives, and fellow citizens out of $43 million. I would recommend that you read this short article carefully as it represents the classic hallmarks of a Ponzi scheme.

Starr Austen & Miller has represented hundreds of victims of Ponzi schemers, just like the scam described in the article below. Ponzi schemers always follow the same basic format:

  • They hold respected positions of trust in their community;
  • They approach the financially naïve, trusting, and often inexperienced;
  • They promise the trifecta of what almost all investors are looking for: high returns – typically quoting 10%, liquidity – you can get your money whenever you want, and safety;
  • Although they are quick to take your money they are slow and vague when it comes to giving explanations; and
  • Except for the fortune few who get out early, they squander their clients’ investments leaving a large majority holding the bag.

Don’t be scammed by a Ponzi schemer.  If you or a loved one believe you may have been victimized by a Ponzi scheme, immediately call Starr Austen & Miller.  We have recovered millions for folks in these situations.

 

Tenn. Tractor Supplier Gets 3 Years For $43M Ponzi Scheme

By Dean Seal of Law360.com

A Tennessee federal judge on Monday sentenced a businessman to three years in prison and ordered him to pay more than $10 million in restitution to victims of a multiyear scheme in which he obtained and misused more than $43 million in investments for his tractor supply company.

Only one month after he was charged, Jeffery L. Gentry, 40, pled guilty in August 2017 to charges of wire fraud and money laundering for having solicited investments from friends, family and customers of his company Gentry Brothers Tractor Supply under the false representation that he was using the money to bid on, win and fulfill state contracts for supplying farm equipment.

“Defendant, at all times, knew there were no state contracts and no equipment had been, or would be, purchased with investor-victim funds,” prosecutors said in a presentence filing earlier this month. “Further, the defendant never intended to invest the investor-victims’ funds as promised. Instead, he used the money to subsidize his lifestyle, amassing assets worth a substantial amount of money, including numerous tracts of real estate and vehicles.”

According to court records, Gentry owned and operated Gentry Brothers in Sparta, Tennessee, and, from 2012 until late 2016, executed a Ponzi scheme of obtaining money and property from investors. Gentry promised high rates of return on investments that he claimed would be used to purchase equipment needed to fulfill the purported state contracts, investigators said.

Through the scheme, Gentry amassed approximately $43 million from more than 50 individuals, eventually causing more than $10 million in financial losses, according to prosecutors.

In March 2016, Gentry used investor money to fund and support his new business venture, Gentry Auto LLC, prosecutors said. The used car lot, also located in Sparta, received nearly $366,000 in transfers from one of Gentry’s “scheme accounts” associated with Gentry Brothers.

“The defendant knew the funds involved the proceeds of his fraudulent investment scheme and conducted the transaction in a manner intended to conceal and disguise the nature and source of the proceeds.,” prosecutors said in a pre-sentence filing.

When law enforcement caught wind of the scheme in late 2016, Gentry “immediately began cooperating,” prosecutors said, helping to identify victims, determine the total loss suffered by victims and maximize the value of his assets for forfeiture and restitution.

During the investigation, authorities seized Gentry’s assets, including his businesses, vehicles, farm equipment, houses, land and approximately $300,000 in cash. Gentry was formally charged in July 2017 and pled guilty the following August, after which his assets were liquidated at auction to create more than $1.3 million in victim restitution.

While prosecutors sought a more than eight-year prison sentence for Gentry, U.S. District Court Judge Aleta A. Trauger opted for three years followed by three years of supervised release, along with an order for $10,410,672 in restitution.

Prosecutors and counsel for Gentry did not immediately respond to requests for comment Monday.

The government is represented by Kathryn Risinger and Debra T. Phillips of the U.S. Attorney’s Office in Nashville, Tennessee.

Gentry is represented by Jonathan P. Farmer of Farmer Purcell White & Lassiter PLLC.

The case is USA v. Gentry, case number 2:17-cr-00005, in the U.S. District Court for the Middle District of Tennessee.


The team of investment fraud lawyers at Starr Austen & Miller LLP fights for the protection of investors and handles cases involving securities arbitration misrepresentation, overconcentration, broker fraud, negligence and breach of trust.