Date: 12-29-2017

Case Style:

Case Number: 1:17-mj-00340-PAS

Judge: William E. Smith

Court: United States District Court for the District of Rhode Island (Providence County)

Plaintiff's Attorney: Lee H. Vilker and John P. McAdams

Defendant's Attorney: Olin W. Thompson - FPD

Description: Providence, RI - Jewelry Distributor Pleads Guilty in Multi-Million Dollar Fraud Scheme

A Rhode Island jewelry distributor pleaded guilty on December 20, 2017 to federal charges that he orchestrated a long-running fraud scheme that defrauded a debtor finance company of more than $3.6 million dollars.

Appearing before U.S. District Court Chief Judge William E. Smith, Gerald Kent, 52, of Groton, CT, owner and operator of Kent Jewelry, formerly located in Johnston, RI., admitted that he executed the fraud scheme while selling his company’s jewelry on the internet, primarily using websites such as Groupon.com and Zulily.com.

Acting United States Attorney Stephen G. Dambruch; Brian Deck, Resident Agent in Charge of the Providence Office of the U.S. Secret Service; and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation Boston Division announced Kent’s guilty plea to one count each of wire fraud and aggravated identity theft.

At the time of his guilty plea, Kent admitted to the Court that he submitted fraudulent invoices to a factoring (debtor finance) company based in Chicago, Ill., mostly from Groupon and Zulily, which resulted in payments to him of nearly $5 million dollars. Kent admitted that he created hundreds of fraudulent invoices which were submitted to the factoring company for which he received payment; created and used a fraudulent clone of Groupon, Inc.’s website; enlisted coconspirators to pose as Groupon employees; and opened bank accounts in the names of Groupon and Zulily, Inc., in order to deceive the debtor finance company into believing it was receiving payments from these companies.

Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. Factoring companies work with businesses to provide working capital in order to grow their businesses without having to wait for outstanding accounts receivables to be paid.

Kent was first charged in this matter by way of a criminal complaint filed on July 17, 2017. He was ordered released on $50,000 unsecured bond on July 26, 2017. He is scheduled to be sentenced on March 9, 2018.

Wire fraud is punishable by statutory penalties of up to 20 years imprisonment; a fine of $250,000 or twice the pecuniary gain or loss resulting from the offense, whichever is greater; and a term of supervised release of 3 years. Aggravated identity theft is punishable by statutory penalties of up to a mandatory minimum consecutive sentence of 2 years imprisonment; a fine of $250,000; and a term of supervised release of 3 years.

The case is being prosecuted by Assistant U.S. Attorneys Lee H. Vilker and John P. McAdams.

The matter was investigated by agents from the United States Secret Service and the Federal Bureau of Investigation.

Outcome: Guilty

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Defendant's Experts:

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