Banking & Finance, Government, and Law

Judge sentences man for gold fraud

August 19, 2014
| By AP |
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Judge sentences man for gold fraud
Gold bars branded by the Union Bank of Switzerland. Photo via wikimedia.org

A man has been sentenced to prison for failing to file income tax returns and running a multi-year scheme involving the bogus recovery of overseas gold.

Freeman Carl Reed, 45, formerly of St. Joseph, was sentenced to seven years and three months in prison, the U.S. Attorney's Office in Grand Rapids said last week.

Money was solicited to recover "Yamashita's gold" — gold bars reportedly hidden in the Philippines by Japanese soldiers at the end of World War II. Investors were told their money was needed to extract it.

Investors were also told that Reed had access to gold certificates worth millions of dollars.

He said he concocted the gold fraud scheme after his direct-marketing business failed.

"Mr. Reed was not selling an investment. Instead, he developed an elaborate hoax meant to enrich himself," said Jarod Koopman, acting special agent in charge, Internal Revenue Service. "The prosecution and sentencing of Mr. Reed — who diverted investor's funds for his benefit and then intentionally failed to file income tax returns — is a fundamental element in maintaining public confidence in our tax system."

A federal jury convicted Reed in February of failing to file tax returns.

Authorities said evidence showed he had not paid taxes for nearly 10 years, despite earning more than $1 million over a three-year period.

His extravagant lifestyle included five luxury vehicles and an expensive home.

Reed pleaded guilty to the gold fraud after the tax trial.

"Reed was able to obtain $1.3 million in connection with the two schemes," the U.S. Attorney’s Office said. "Instead of using the investors' money as promised, Reed admitted that he spent it on himself so that he could maintain his façade of wealth."

He was ordered to pay $1.3 million in restitution to victims of the fraud.

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