Gold-recovery scam nets long prison term for ex-St. Joe resident
Former SJ man cheated investors by promising hidden gold
Posted: Thursday, August 14, 2014 6:00 am
GRAND RAPIDS - A former St. Joseph man convicted of defrauding investors through a scheme that promised wealth from gold hidden in the Philippines was sentenced Wednesday to 87 months in prison.
Freeman "Buck" Reed, 44, was ordered as part of the sentence imposed by U.S. District Court Judge Janet Neff to pay $1.32 million in restitution to victims and $565,509 to the IRS.
Freeman "Buck" Reed, 44, was ordered as part of the sentence imposed by U.S. District Court Judge Janet Neff to pay $1.32 million in restitution to victims and $565,509 to the IRS.
Neff also said she is "convinced Mr. Reed will scam again, possibly even while he's in prison."
Reed and another man were indicted in July 2013 in a scheme to cheat investors out of money they solicited to recover gold and some gold certificates.
Reed claimed the gold was hidden in the Philippines by the Japanese during World War II, and that he needed capital to finance the recovery effort.
The scheme was initiated in 2007, according to the indictment, and for several years potential investors were told that Reed and his associate, Gary Degler, had access to the site where the gold bars were hidden.
The government alleged that a separate part of the scheme lured new investments with phony claims that Reed and Degler also had access to gold certificates obtained from Ferdinand Marcos, former president of the Philippines.
While there never was any gold or gold certificates, federal prosecutors said, Reed took steps to convince investors that the gold bar scheme was legitimate and the payoff was a sure thing.
Investors were shown a work area, represented as the site of the hidden gold, where men and boys were digging.
Reed and Degler spent liberal sums of the investment money on themselves, prosecutors said, buying a house, cars and paying for vacations.
Reed bought a pair of snowmobiles for $15,500, and spent $79,349 on a large deck to his St. Joseph residence in 2008-09, prosecutors said.
Assistant U.S. Attorney Clay Stiffler said there were 16 victims.
On March 13, Reed pleaded guilty to one count of fraud by wire, radio or television, a felony that carries a penalty of up to 20 years in prison.
A plea agreement in the case was sealed by the court and not made public.
A jury in U.S. District Court in January found Reed guilty of three counts of failing to file tax returns for the years 2008, 2009 and 2010.
A single sentence was imposed for the charges of fraud and failing to file tax returns.
At the time a grand jury handed down the indictment, Reed was no longer living in St. Joseph. Degler is a U.S. citizen who was living in the Philippines at the time.
The wire fraud occurred from July 31, 2008, to Sept. 17, 2009, according to the indictment, and involved transfers of money from investors to Reed's bank accounts, and text messages from Reed to investors, the document states.
