Two men from the US state of New Jersey and another from Nevada have been convicted by a federal jury for their roles in defrauding multiple victims out of money through a US$1 million "upfront-fee" scheme.

The defendants falsely represented that their company could acquire and provide a standby letter of credit (L/C) backed by either EUR 1 billion in cash or highly lucrative Mexican gold bonds.

Following a five-week jury trial, Jerrid Douglas, Harold Mignott and Roy Johannes Gillar, were each convicted of wire fraud conspiracy and four counts of wire fraud. Gillar and Douglas were also each convicted of one count of transacting in criminal proceeds.

Prosecution case

According to documents in this case and evidence at trial, the three men, along with a fourth conspirator, agreed to defraud the owners of the victim company of approximately US$1 million.

The defendants fraudulently induced the two victim company owners to enter a joint venture agreement with the defendants' New Jersey-based shell company and falsely represented that they could acquire and provide the well-backed standby L/C.

Upfront fee

The victim company wanted access to the standby L/C so it could purchase raw gold overseas and sell it to gold refineries and agreed to pay the defendants US$1 million for the bank fee associated with the L/C.

To cover up the scheme and convince the victims to approve the transfer of the funds, the defendants made numerous verbal and written misrepresentations, including providing the victims with a phony letter from a major international bank saying that it was ready, willing, and able to provide a EUR 1 billion standby L/C to the defendants' shell company.

Misappropriated money

However, after the victim company owners transmitted US$800,000 of the $1 million to the defendants, the defendants failed to provide an standby L/C or anything of value.

Instead, the defendants misappropriated the money for their personal use.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.