UNITED STATES ATTORNEY'S OFFICE EASTERN DISTRICT OF VIRGINIA ALEXANDRIA    NEWPORT NEWS    NORFOLK    RICHMOND CHUCK ROSENBERG, UNITED STATES ATTORNEY

Operator of Nationwide Multi-Million Dollar Ponzi Scheme Sentenced for Mail Fraud

( Richmond, VA) – R. Gregory Gibbs, age 56, of New Haven, West Virginia, was sentenced today by United States District Judge Henry E. Hudson to 63 months’ incarceration, following his guilty plea to mail fraud. As part of the sentence, the Court ordered Gibbs to pay restitution, but deferred a finding on the amount to allow the United States to finalize the actual loss for each victim. Chuck Rosenberg, United States Attorney for the Eastern District of Virginia; Jennifer Smith Love, Special Agent-In-Charge, Federal Bureau of Investigation, Richmond Division; and Guy Cottrell, Postal Inspector-In-Charge, Washington Division, announced the plea.

In support of the plea, Gibbs admitted that he engaged in a scheme to defraud numerous individuals who had invested in Golden Summit, a business he owned and operated, through a Foreign Currency Market (“FOREX”) Ponzi scheme. The FOREX is an over-the-counter speculative market in which buyers and sellers trade one currency for another. As part of Gibbs’s scheme, he would enter into loan agreements with investors who would loan Golden Summit money for a period of 12 months and, in return, Golden Summit promised to pay a guaranteed rate of interest of between 3 to 5% per month. From August 2004 until March 2007, pursuant to his loan agreement program, Gibbs accepted approximately $21 million of investor funds from approximately 150 investors located in 24 states across the nation.

Gibbs has acknowledged that although he initially believed that he could make good on his promises of paying investors a large return on their investments, by June of 2006, his sustained and rapidly growing FOREX trading losses made it apparent that he would not be able to do so. Despite this, Gibbs continued to accept new investor money and made false representations about his trading success and the safety of the client investments. Specific misrepresentations by Gibbs to many investors included his claim that the majority of the money that he traded in the FOREX was his personal funds. This statement led investors to believe that Gibbs had significant personal assets and that he could make good on his promised interest payments even if he experienced trading losses in the FOREX market. In truth, the vast majority of the money traded by Gibbs was investor funds. Gibbs made other misrepresentations to many investors to assuage their concerns regarding the safety of their investments, including his claim that he had enough personal assets on hand to pay all outstanding “loan” obligations – both principal and interest – if he became incapacitated or died. In truth, he had very limited personal assets – other than those purchased with investor funds – and his mounting trading losses made repayment of the outstanding loan obligations almost impossible given his sustained losses in the FOREX.

Of the approximately $21 million that Gibbs received from investors, he deposited approximately $7.2 million in a FOREX trading account and utilized these funds to make foreign currency market trades. He lost approximately $6.2 million of that money. Gibbs also paid other individuals approximately $1.4 million for referring investors to Golden Summit. In addition, he utilized approximately $1.75 million in investor funds for personal expenditures, including approximately $1.1 million spent building a luxurious home for himself and his family.

Consistent with typical “Ponzi” or pyramid scams, Gibbs made some payments of what he purported were returns on investments to certain investors. The payments were intended to convince the investors that the investments were sound and to conceal the significant FOREX trading losses. In fact, however, the payments were made from deposits from investors who had come into the scheme later.

The investigation was conducted by the Federal Bureau of Investigation and the United States Postal Inspection Service. The United States Attorney’s Office for the Eastern District of Virginia acknowledges the assistance of the Securities and Exchange Commission in connection with this matter. In addition, the Commodity Futures Trading Commission provided assistance related to the FOREX trading account. Assistant United States Attorneys Michael S. Dry and Laura Colombell Marshall prosecuted the case for the United States.

A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.usdoj.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on http://pacer.uspci.uscourts.gov.