Source: Office of United States Attorneys
Gifford “Chip” Cummings, Jr. also was ordered to repay $5,755,477 to victims
GRAND RAPIDS – U.S. Attorney for the Western District of Michigan Mark Totten today announced that Gifford “Chip” Cummings, Jr., age 61, of Grand Rapids, Michigan, was sentenced to 66 months in federal prison, followed by two years of supervised release, and $5,755,477 in restitution for executing a scheme to defraud investor clients at Red Oak Capital.
“Mr. Cummings deliberately cheated investors out of hundreds of thousands of dollars for his personal gain,” said U.S. Attorney Mark Totten. “Financial fraud is a serious problem, and my office will not hesitate to prosecute fraudsters whose schemes inflict devastating financial harm on legit businesses and honest investors.”
Cummings pleaded guilty to executing a scheme to defraud while serving as President and CEO of a Grand Rapids, Michigan investment firm. Cummings put $5 million of client money in an unauthorized investment in December 2019. The investment immediately began to lose hundreds of thousands of dollars in value. When his business partners learned of the secret investment, they demanded that Cummings retrieve the money and return it to the firm.
Instead of doing so, Cummings submitted altered account statements to make it appear that his unauthorized investment was performing better than it was to hide the mounting losses. Cummings also created a fake document purporting to show that he had sought the return of the investors’ money when in fact he had not. Ultimately, the firm was able to recoup only $761,522.90 of its initial investment. During the firm’s investigation of Cummings’ crime, it was discovered that he also failed to repay a $1,350,000 debt. Cummings made it appear as though the debt had been repaid when in truth, he had deposited that money into a bank account he controlled.
“Today’s sentencing of Gifford (Chip) Cummings, a former executive at a Michigan-based investment firm, highlights the FBI’s unwavering commitment to addressing both financial and cybercrimes, especially those perpetrated by individuals in positions of trust,” said Cheyvoryea Gibson, Special Agent in Charge of the FBI in Michigan. “This case, involving wire fraud, unauthorized investments, and illegal access to computer networks, resulted in millions of dollars in losses. The investigation, spearheaded by the Detroit Field Office Cyber Task Force and the Grand Rapids Resident Agency, was crucial in securing a successful prosecution by the U.S. Attorney’s Office for the Western District of Michigan. The FBI remains steadfast in pursuing justice and safeguarding Michigan communities from those who exploit their trusted positions.”
This case was investigated by the Federal Bureau of Investigation. Assistant U.S. Attorneys Davin Reust and Chris O’Connor prosecuted it.
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