CHARLOTTE, NC (WBTV) - A former North Carolina resident was sentenced today in U.S. District Court for his involvement in the $32.5 million "Queen Shoals Ponzi scheme", according to a release from the U.S. Attorney's Office.
Gary D. Martin, 61, of St. Augustine, Florida, was sentenced to 10 years in prison to be followed by two years of supervised release. He was also ordered to pay $31,707,038 as restitution to the victims of the Ponzi scheme, and ordered liable to forfeit and repay the Government for the approximate $28,500,000 in proceeds of the scheme, the report states.
In February 2012, Martin pleaded guilty to one count of a money laundering conspiracy in connection with the "Queen Shoals Ponzi scheme." According to court documents and court proceedings, on or about December 2007, Martin formed Queen Shoals Consultants, LLC (QSC) in North Carolina.
Martin and others induced victims to invest over $28.5 million in the Ponzi scheme operated by Sidney Hanson.
Court records show that although Hanson never directly told Martin that Queen Shoals was a Ponzi scheme, Martin induced victims to invest through a series of false and fraudulent representations.
Specifically, Martin falsely claimed that QSC had over 20 years' experience in financial services and international finance and that he had a vast background in financial services, including the silver, gold and foreign currency trading markets. In fact, officials told WBTV, Martin had no such experience, held no professional licenses related to finance or investments, and had never engaged in any silver, gold or foreign currency trading.
According to court documents, Martin, through the QSC web site and other means, also made false claims about QSC's financial expertise in "Self-Directed IRA Strategies and Fixed Rate Accounts." Martin held QSC out as "leaders in Professional Private Placement Retirement Planning" and falsely claimed that QSC had a "proven method of diversification [that] spreads the risk nicely for a balanced portfolio," when, in fact, QSC offered no such diversification and funneled victim funds solely into the scheme.
Court records also show that Martin routinely vouched for the success and reliability of Queen Shoals by claiming to have personally invested a significant amount of his own money into Queen Shoals when, in fact, he invested only $4,000.
According to filed documents and today's sentencing hearing, Martin engaged in money laundering transactions by utilizing the referral fees he received from Hanson to pay commissions to himself and the so-called QSC consultants. From in or about 2007 to in or about 2009, Martin received over $1.9 million in referral fees from Hanson and paid the consultants over $1.5 million during the relevant time period in return for inducing victims to invest in the Queen Shoals Ponzi scheme.
Sidney Hanson, the mastermind of the Queen Shoals Ponzi scheme, was convicted of securities fraud and wire fraud and is currently serving a 22-year federal sentence. He was also ordered to pay over $31,000,000 in restitution. To date, over $9,000,000 has been paid to the Clerk of Court to pay victims of the Ponzi scheme.