NJ man pleads guilty to mail fraud |
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Tue, 17 Jul 2007 23:33
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TRENTON, N.J. (AP) - A former Florham Park man pleaded guilty Tuesday to one count of mail fraud related to an investment scheme that bilked New Jersey investors of more than $13 million, according to the U.S. Attorney's Office.During his plea hearing in federal court, David J. Kaye, 55, admitted that businesses he set up were a sham.The money was supposed to go to Intaport Trading, a New Jersey-based business that supposedly purchased goods for shipment out of the United States and sale in 'duty free' stores in Europe and elsewhere.But according to Kaye's own admission, the funds were instead paying for his own expenses and funding interest payments to other Intaport investors to make it appear that their investment was performing as Kaye had promised.Prosecutors described the fraud as 'a classic Ponzi scheme,' in which abnormally high returns are paid to initial investors out of money provided by subsequent investors. It's named after a notorious swindler named Charles Ponzi, who used the scheme extensively in the U.S. in the early 1900s.Kaye admitted on Tuesday that he even misled investors with fraudulent invoices, wire transfer notices, account statements and financials.Under investigation, Kaye left the United States for South Africa in 2003. But authorities caught up with him last December after he traveled to London. Kaye consented to extradition after his arrest.The maximum sentence for the mail fraud count would be 20 years in prison and a $250,000 fine. Sentencing is scheduled for October.Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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