A former youth pastor was sentenced
to serve 51 months in federal prison for masterminding a Ponzi scheme
purporting to buy and sell precious jewels. Matthew James Addy, 34, received
the sentence from United States District Judge James C. Cacheris after
guilty to a single count of securities fraud back in February. He was also
ordered to pay approximately $2.74 million in restitution to defrauded investors.
According to authorities, Addy owned Edward J &
Compant, which operated LaPorte Jewelers ("LaPorte"). Beginning
in 2010, Addy began seeking investors for promissory notes in which the
proceeds would be used for the purchase and resale of wholesale jewelry and
loose precious stones. In exchange for their investments, individuals were
given promissory notes carrying above-average rates of interest that
purportedly were linked to specific jewelry transactions entered into by Addy. In
seeking investors, Addy relied on his affiliations with various religious
organizations, and a majority of the 40-plus total investors were recruited
from these groups. In all, Addy raised more than $3 million.
However, according to the FBI and as admitted by Addy,
LaPorte was nothing more than a front for an elaborate Ponzi scheme that used
investor funds to make Ponzi-style payments and for a variety of other
unauthorized uses. While approximately $665,000 was paid to investors, these
payments came not from legitimate profits, but instead from the funds of new
investors - the hallmark of a Ponzi scheme. When LaPorte originally closed down
in June 2012, Addy blamed the
store's bad fortunes on mounting monthly losses due to declining revenues.
For more news and analysis of Ponzi schemes, visit
Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.
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