Devon McLean of Georgia pleaded guilty in St. Thomas to federal wire fraud as part of a plea agreement entered March 5, in relation to a Ponzi scheme in which he and co-defendant Janice Rey allegedly bilked some 50 investors out of more than $5.5 million.
McLean and Rey were both charged in federal court with one count of conspiracy to commit wire fraud, eight individual counts of actual wire fraud and 43 counts of money laundering as they moved the money from account to account and ultimately to their own uses. Rey was also charged with evading about $500,000 in income taxes.
According to the indictment, Rey was chief executive officer and McLean chief financial officer of a company they set up in Nevada called Paramount Group. They then set up a storefront on St. Thomas where they solicited investors.
Prosecutors say the two told investors Paramount is part of the massive multinational Halliburton company, and because of this claimed relationship, it could generate large returns on investment and investors would double their money in less than a year. They claimed then-Vice President Dick Cheney, who at one time was chairman and CEO of Halliburton, was associated with the group, and that it was making an array of investments overseas.
From 2005 through 2009, the two allegedly took hundreds of thousand of dollars in investor funds and distributed them to several bank accounts. Many of the transactions were allegedly laundered through "Junor Company," an art gallery in Decatur, Ga. owned by McLean.
Rey was arrested and charged by the V.I. Department of Justice with several crimes under V.I. law for the same actions.
In the plea agreement filed in U.S. District Court on St. Thomas this week, McLean pleaded guilty to a single charge of conspiracy to commit wire fraud. By admitting to the conspiracy charge, McLean effectively also admitted to the accuracy of the other, individual charges of wire fraud that comprise the conspiracy, even as prosecutors agree not to pursue those charges.
McLean avers in the agreement that he "conspired with his co-defendant to operate a ‘Ponzi’ investment scheme" from 2005-2009, "defrauding people of over $5.5 million."
The plea document says he and Rey "perpetrated the scheme by setting up bogus businesses and enticing people to invest with these businesses by promising them huge returns on their investment. Instead of actually investing the money obtained, the defendant and his co-defendant instead used the newly gained funds to pay earlier investors and for personal gain."
Discussing sentencing, the plea agreement says because there are more than 50 victims and the amount of money is high, federal guidelines recommend a sentence of 63-78 months in jail, and a fine of between $12,500 and $125,000.
The agreement appears to encourage McLean to testify against Rey, saying "(i)f the defendant agrees to provide substantial assistance in the investigation or prosecution of another person …. or otherwise agrees to cooperate … a supplement to this plea agreement shall be submitted … and shall define the terms of such assistance or cooperation."
McLean is also required to forfeit assets and make restitution to the victims.
Rey, meanwhile, is currently scheduled to go to trial April 1, on St. Thomas, according to court documents.
