North Carolina Man Is Seventh Convicted Of $40 Million Black Diamond Ponzi Scheme

It was announced last week that Bryan Keith Coats of Clayton, North Carolina plead guilty to his role in connection with the Black Diamoind Ponzi Scheme Investigation that resulted in a $40 million investment fraud conspiracy. Coats admitted to one count of conspiracy to commit commodities, securities, and wire fraud and one count of promotional money laundering conspiracy.

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According to the bill of information filed on September 29, 2011, from October 2007 to December 2009, Coats recruited several individuals who served as so called “hedge fund managers” in the Black Diamond ponzi scheme. Coats and these hedge fund managers engaged in a conspiracy to induce victims to invest in Black Diamond by making a series of false and fraudulent representations, material omissions, and deceptive half truths.

Specifically, Coats and others falsely represented to victims that they had conducted due diligence on Black Diamond and used a variety of analytical and research tools in selecting Black Diamond as an investment vehicle.

In reality, Coats and his conspirators knew little about Black Diamond, had done no true due diligence, and their so-called hedge funds had no true safeguards to ensure that the victims’ money was being invested legitimately. In addition, Coats and others did not inform investor victims that, at best, the true cost of investing in Black Diamond amounted to over eighty percent (80%) of Black Diamond’s expected profits.

In addition, according to the bill of information, once the Black Diamond ponzi scheme began to collapse, Coats and his conspirators engaged in their own derivative ponzi scheme in order to perpetuate the scheme.

Beginning in March 2009, Coats and others set up a series of cash accounts into which new victim funds were deposited. Rather than investing such funds with Black Diamond, Coats and others used the new investor funds to pay withdrawal requests from old investor victims and to support their own lifestyles. Coats and others did not inform investor victims that their money was simply going into cash accounts rather than being invested as promised, nor that the conspirators were using new investor money to pay withdrawal requests from “old” investor victims.

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Coats is the seventh conviction in the Black Diamond ponzi scheme since the first conviction of Keith Franklins Simmons last December.

Coats faces a maximum of 15 years imprisonment, and either a $500,000 fine or a fine of not more than twice the amount of criminally derived property involved in the money laundering conspiracy – Source.

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