|The United States Attorney's Office for the Northern District of Texas reports that the Federal Grand Jury has indicted three men accused of being involved in a fraudulent diamond investment scheme.
The three defendants reportedly ran the scheme from around March 2011 through to November 2013, through a company called Worldwide Diamond Ventures, LLP, selling "Non-Recourse Promissory Notes" (diamond notes) to investors, with each US$50,000 diamond note having a nine-month maturity date and an 8 percent rate of return. According to the indictment, the investors were told that all invested funds would be used to purchase and re-sell diamonds, and that the diamond notes were fully secured by diamond inventory and cash. However, the investors' funds were reportedly used for other purposes, such as loans to third parties, which it seems were only partially repaid.
According to the indictment, 77 investors bought into the scheme, and, as a result of the alleged fraud, sustained a total loss of at least US$4,922,811.Worldwide Diamond Ventures filed for Chapter 7 bankruptcy on October 1st, 2013. The U.S. Attorney's news release notes that the case is one of several felony prosecutions of bankruptcy-related crimes generated by the Bankruptcy Fraud Initiative in the Northern District of Texas.