A banker in the US state of Georgia, entirely through his own wholly owned bank, is alleged to have defrauded investors of approximately US$1.6 million in two investment scams, according to a filing by the US Securities and Exchange Commission (SEC) in a court in Atlanta.

In the filing, the SEC accuses Roosevelt Bailey of using fraudulent letters of credit (L/Cs) in one investment scam and enticing investors into a get-rich-scheme purportedly involving gold and diamonds in another.

Prosecutors for the SEC further allege that a former attorney and Florida prosecutor, Alvin Jones, helped the banker in these investment schemes, and appeared to have not noticed several red flags when holding on to his investments in the alleged scam.

Bank owner

Through his own Borg Bank, Bailey raised approximately US$1.6 million by offering and selling fraudulent investments to the public on the promise of astronomical returns obtainable over short periods of time with little or no risk of principal loss to investors.

Contrary to these representations, investors never received their promised returns and most lost all of their investment while Bailey profited.

Investment choices

Two types of investment contracts were offered to investors. In one of these an investor would front fees to supposedly 'lease' and 'monetise' high-value purported bank instruments sold as standby L/Cs and another where investors' money would be pooled and invested in supposedly lucrative gold and diamond investments in Africa and South America.

In reality, Borg Bank never leased or monetised standby L/Cs as it said it would and it obtained only a few precious stones that Bailey sold for minimal profit. Instead, substantial amounts of investors' funds were directed to Bailey's personal benefit, including to buy him furs and furniture, pay his credit card bills, and pay fees for his personal real estate deals.

To demonstrate to early investors that their investments would produce cash returns, Bailey made approximately US$250,000 in advance 'Ponzi' payments.

Attorney ignores red flags

Bailey directed the majority of investors to send their investments to a lawyer's bank account held by another defendant in this case, Alvin Jones, an attorney and former Florida prosecutor, who disregarded numerous red flags as he provided substantial assistance to Bailey's alleged fraud.

Jones received numerous investor complaints that Bailey and Borg Bank were engaged in fraud or misusing the money that the former prosecutor was collecting on their behalf, yet the lawyer continued to facilitate the scheme's financial transactions and collect fees for that work.

The filing brought by the US Securities and Exchange Commission (SEC) against Roosevelt Tobias Bailey, Borg Investment Bank & Capital Trust, and Alvin Christopher Jones, (Defendants), and Borg Global Holdings, (Relief Defendant) can be found here.

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