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Financial Crimes

Jamaican citizen pleads guilty to $220 million international Ponzi fraud and money laundering scheme

ORLANDO, Fla. - David A. Smith, 41, a Jamaican citizen who was living in The Turks and Caicos Islands, pleaded guilty today to four counts of wire fraud, one count of conspiracy to commit money laundering, and 18 counts of money laundering.

Smith's guilty plea follows an investigation conducted by the U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), the Internal Revenue Service, and the Federal Bureau of Investigation.

"Investigating the flow of illicit money across U.S. borders and the criminal enterprises behind that money is one of our top priorities," said Susan McCormick, special agent in charge of ICE HSI in Tampa. "These types of financial schemes not only damage the lives of the victims, but the international money laundering involved poses a direct threat to the security of the U.S. financial system."

Last year, Smith pleaded guilty to fraud and conspiracy charges filed in The Turks and Caicos Islands arising from his investment scam there, and he was sentenced to serve 6.5 years in prison.

An information charging Smith with these offenses was filed on Aug. 18, 2010.

In November 2010, ICE HSI special agents traveled to Turks and Caicos Islands to bring Smith to the United States. His initial appearance in Federal District Court in Orlando was on Nov. 19, 2010 and the case was set for trial in April 2011.

According to the plea agreement, for more than three years, Smith executed a Ponzi scheme to defraud over 6,000 investors located in the Middle District of Florida and elsewhere out of over $220 million.

Smith led investors to believe that he was investing their money in foreign currency trading and earning, on average, 10 percent per month, when in fact he was not trading their funds. Foreign currency trading is a highly volatile and risky investment vehicle that is regulated in the United States by the Commodity Futures Commission and the National Futures Association.

In addition to defrauding those investors, Smith conspired to launder the proceeds that were received in his scam, and he participated in the laundering of millions of dollars of proceeds that were obtained as a result of wire fraud.

The four counts of wire fraud are based on Smith's transmitting false and fraudulent account statements to several investors through email and the internet website for his investment club.

Smith also conspired with others to launder approximately $128 million of proceeds that were obtained as a result of the wire fraud scheme, and he in fact laundered those millions of dollars. The purpose of the money laundering engaged in by Smith and his conspirators was to conceal and disguise the nature, the location, the source, the ownership and the control of the proceeds of the wire fraud.

During the entire time that Smith operated his Ponzi scheme, the only source of income for him and his wife was from investors' funds. Smith's operation of the Ponzi scheme effectively ended on July 15, 2008, when the Royal Turks and Caicos Police Force, Financial Crimes Unit, executed search warrants at Smith's place of business and residence in Providenciales, Turks and Caicos Islands.

The wire fraud counts carry a maximum penalty of 20 years in federal prison, a fine of $250,000, and a term of supervised release of not more than three years. In addition, for each count of wire fraud, the fine may be assessed at twice the amount of gross gain or loss. The money laundering counts each carry a maximum penalty of 20 years in federal prison, a fine of $500,000 or twice the value of the property involved in the transaction, whichever is greater, and a term of supervised release of not more than three years.

Investigative support has been and continues to be provided by foreign law enforcement agencies and governments, including the Financial Crimes Unit with the Royal Turks and Caicos Police Force, the Financial Services Commission in Jamaica, the Special Investigation and Prosecution Team in Turks and Caicos, and the governments of the United Kingdom, Turks and Caicos, and Jamaica. Additional support has been provided by the United States' Commodity Futures Commission and the National Futures Association.

Any person who is a victim and wishes to submit a claim for restitution may contact the U.S. Attorney's office through a special email account, usaflm.david_smith_ponzi@usdoj.gov.

This case is being prosecuted by Assistant U.S. Attorney Bruce S. Ambrose, Middle District of Florida.