Wholesale Jewelry Distributor Charged in Multi-Million Dollar Fraud Scheme

Thursday, July 20, 2017

PROVIDENCE – Gerald Kent, 51, of Groton, CT, owner and operator of Kent Jewelry in Johnston, RI., made an initial appearance in U.S. District Court in Providence today and was ordered detained in federal custody, charged by way of a criminal complaint with wire fraud and aggravated identity theft.

It is alleged in court documents that Kent, through his company, which primarily sells jewelry on the internet using websites such as Groupon.com and Zulily.com, orchestrated a long running, multi-million dollar fraud scheme that defrauded a debtor finance company of more than $3.6 million dollars.

The charges are announced by Acting United States Attorney Stephen G. Dambruch; Brian Deck, Resident Agent in Charge of the Providence Office of the U.S. Secret Service; and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation Boston Division.

According to an affidavit in support of the criminal complaint, it is alleged that Kent submitted fraudulent invoices to a factoring (debtor finance) company based in Chicago, Ill., mostly from Groupon and Zulily, which resulted in payments to Kent of nearly $5 million dollars.

According to the affidavit, it is alleged that to execute the fraud scheme, Kent created hundreds of fraudulent invoices which were submitted to the factoring company for which he received payment; created and used a fraudulent clone of Groupon, Inc.’s website; enlisted coconspirators to pose as Groupon employees; and opened bank accounts in the names of Groupon and Zulily, Inc., in order to deceive the debtor finance company into believing it was receiving payments from these companies.

Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount.  Factoring companies work with businesses to provide working capital in order to grow their businesses without having to wait for outstanding accounts receivables to be paid.

Kent, who was arrested on Wednesday evening at Foxwoods, appeared today before U.S. District Court Magistrate Judge Patricia A. Sullivan and was ordered detained pending a detention hearing on July 26, 2017.

A criminal complaint is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

The case is being prosecuted by Assistant U.S. Attorneys Lee H. Vilker and John P. McAdams.

The matter was investigated by agents from the U.S. Secret Service and the FBI.

Former Alabama Jail Employee Sentenced for Stealing Identities as Part of Tax Refund Fraud Scheme

A Troy, Alabama, man was sentenced to prison today in U.S. District Court for the Middle District of Alabama for his involvement in a stolen identity tax refund fraud scheme, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division and U.S. Attorney George L. Beck Jr. of the Middle District of Alabama.

Devon Tucker, 31, a former jailer of the Troy Police Department at the city jail, pleaded guilty earlier this year to one count of conspiracy to defraud the United States and one count of aggravated identity theft.  U.S. District Judge Callie V.S. Granade sentenced Tucker to serve 32 months in prison and three years of supervised release, and ordered him to pay $13,162 in restitution to the Internal Revenue Service (IRS).

According to court documents, from January 2014 to January 2015, Tucker stole the personal identification information of approximately 150 individuals who were processed into the Troy city jail.  Tucker provided those identities to his co-conspirators for the purpose of filing false federal income tax returns claiming fraudulent refunds from the U.S. Treasury.  Tucker was paid in pre-paid debit cards in the names of the identity theft victims for his involvement in the scheme.

“The Tax Division will vigorously pursue and prosecute government employees who abuse their positions by exploiting their access to personal information to victimize members of the community and steal from the U.S. Treasury,” said Acting Assistant Attorney General Ciraolo.

“It is always a sad day when a law enforcement officer sworn to uphold the law, takes advantage of his position for his own personal gain,” stated U.S. Attorney Beck.  “This district will continue to vigorously prosecute those who steal identities and file fraudulent tax returns, regardless of where they are employed or what position they hold.”

Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Gregory P. Bailey and Michael P. Hatzimichalis of the Tax Division and Assistant U. S. Attorney Jonathan Ross of the Middle District of Alabama, who prosecuted this case.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.