Three men from the US states of Georgia and South Carolina have been accused of defrauding investors of at least US$775,000 after promising super-high returns from 'leased' letters of credit (L/Cs) or bank guarantees.

Four investors from Atlanta, Florida, Hong Kong and Mexico were promised risk-free returns of as much as 35 per cent a week but instead lost substantial sums of money in this so-called prime bank scheme.

'Leased' L/Cs

Two of the accused, Jeffrey Smith and Joseph Carswell, set up investment businesses that were never incorporated while Michael Fullard allegedly acted as a sales agent for these firms according to investigators.

They say that between 2013 and 2014, the men told the four investors that they could 'lease' L/Cs or bank guarantees for fees ranging from US$100,000 to US$250,000.

Heavy losses

The investment scheme was described by the accused as 100 per cent safe but no L/Cs or bank guarantees were ever leased. Instead, the accused distributed the cash meant for investments amongst themselves while investors recovered a small fraction of their money.

A Hong Kong investor who put US$182,000 in a scheme for example recovered only US$10,000, according to investigators.

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