Jay Bruce Heimburger, a Dallas man, has pleaded guilty to mail fraud over his involvement in a $6.4M investment scam that allegedly took place from about March 2011 to November 2013. He faces up to more than 20 years in prison, has to pay a $250K fine, and could be ordered to pay restitution.
Heimburger is the second man to plead guilty in the investment scam, which defrauded investors of $6.4M. In plea documents, Heimburger admitted to seeking to bilk investors while using false pretenses and promises, as well as by making misrepresentations.
Another man, Houston resident Christopher Arnold Jiongo, pleaded guilty earlier this year to wire fraud related to the scam. Both men will be sentenced later this year. A third Texan, Craig Allen Otteson from McKinney, is scheduled to plead guilty on July 18.
According to the criminal indictment brought by a Dallas jury, the three men tried to raise money for their new business, which involved buying and reselling diamonds. They sought to raise funds through the sale of limited partnerships, at $100,000 a minimum each, in Worldwide Diamond Ventures. Heimburger, who also was a director and registered representative of JBH Securities, acted as Worldwide Diamond Venture’s Principal partner. Otteson, was a Managing Member of Stonebridge Advisors LLC, which was a Managing Partner of Worldwide Diamond.
In March 2011, the defendants tried to raise more start-up money through diamond notes that were non-recourse promissory notes. They retained three companies to market and sell these notes, at $50K a piece, to investors in Texas, California, and Pennsylvania. They touted these investments as providing an 8% return rate.
Jiongo is the one who drafted the diamond notes. All three men represented to investors that their money would go toward buying and reselling diamonds. They promised that investments were fully secured.
Unfortunately, once the three men realized that their business would not work as originally intended and they would not be able to honor what they told investors, they then set out to bilk them.
They did this by fraudulently hiding from investors where their money was actually going, which was not tied to diamond resales and purchases. Instead, they allegedly used almost $2.5M of investors’ money to issue unauthorized loans to other parties. Also, about $1M in investor funds were fraudulently transferred.
After 57 investors entrusted $5.1M to Worldwide Diamond Ventures, first-round investors were allegedly bilked after certain material information was kept from them. Another 20 investors put in over $1.3M in total in the company. Heimburger and Otteson are accused of defrauding second round investors again by fraudulently concealing material information.
In October 2013, Worldwide Diamond filed for bankruptcy protection.
Texas Securities Fraud
Our Texas investment fraud law firm represents investors wishing to try to recover their losses. We have helped thousands of investors over the years. Contact Shepherd Smith Edwards and Kantas, LTD LLP today to ask for your free case consultation. You can also reach us by phone at 800-259-9010.
Dallas Man Cops To Diamond Investment Fraud Scheme, Law360, July 12, 2017
Texas Man Pleads Guilty In $6.5M Diamond Investment Fraud Scheme, AdvisorNews, May 30, 2017
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this site, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient’s state. The content of this Website contains general information and may not reflect current legal developments, verdicts or settlements. The Firm expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this Website. Read More.