Federal authorities arrested Beau Diamond for charges including money laundering and wire fraud. It is alleged that Diamond engaged in a fraudulent and elaborate "Ponzi" scheme while conducting business as Diamond Ventures, LLC. Diamond is accused of misappropriating funds received by over 200 clients who intended that their investments be traded on the foreign exchange market ("FOREX"). Diamond formerly represented by a Miami criminal defense attorney, is now represented by a federal public defender.
This case is indicative of the times. As the economy faltered and many investors sought redemptions of their money, perpetrators of fraud became uncovered. Two examples of massive schemes to defraud include the Bernie Madoff and Allen Stanford cases. Although the 38 million in losses in the Diamond case cannot compare to the losses attributable to Madoff and Stanford, the federal sentencing guidelines will not be kind to Diamond whether he enters a plea or takes his case to trial.
The federal complaint filed against Diamond alleges that he received 37.6 million dollars from investors. Diamond Ventures, LLC began operating in April 2006. When the operation began, Diamond Ventures, LLC guaranteed customers a 5% monthly return on their investment. For the first year and a half, clients of Diamond received their monthly payment on schedule. It is unclear whether profits returned to clients were the proceeds from gains in the FOREX market or proceeds from new clients.
The problems became apparent in December 2008 when clients did not receive their monthly checks. A financial review shows that Diamond Ventures received 37.6 million dollars from investors; 15.4 million dollars was lost due to trading, 15.6 million dollars was returned to investors and 6.6 million dollars was used to supplement Diamonds lavish lifestyle. The federal complaint alleges that Diamond used client's money to pay for a Sarasota Condo, an apartment in California, a Lamborghini, vacations and gambling.
In federal court, a bond hearing was held before U.S. Magistrate Judge Thomas B. McCoun III. At the detention hearing, A. Brian Albritton, of the U.S. Attorney's Office for the Middle District of Florida, argued that Diamond was a flight risk. Albritton argued that if Diamond is found guilty of wire fraud and money laundering, he is facing up to 19 years in prison. Diamond's criminal attorney argued for a $500,000 bond. Although Diamond's parents had the $50,000 required to post the bond, McCoun was uncomfortable setting the bail because he is a fight risk and was concerned with parents ability to make good on the bond should Diamond flee the jurisdiction. The federal government has 30 days from the September 1, 2009 arrest to get a grand jury indictment.
Florida Man Charged with $37 Million Ponzi Scheme, Reuters, September 3, 2009.
Fed Charges Beau Diamond of Sarasota in $38 Million Ponzi Scheme, Tampa Business Journal, September 4, 2009.
Bail Denied for Currency Trader Beau Diamond, Herald Tribune, September 11, 2009.