Ex-CEO of Michigan investment firm sentenced for defrauding clients in $5M scheme
(CBS DETROIT) — The former CEO of a Grand Rapids-based investment firm was sentenced to five and a half years in prison for defrauding investors out of $5 million.
Gifford "Chip" Cummings, Jr., 61, of Grand Rapids, pleaded guilty to executing a scheme to defraud clients while serving as president and CEO of Red Oak Capital.
In December 2019, Cummings put $5 million of client money in an unauthorized investment, which officials said immediately lost hundreds of thousands of dollars in value. When his business partners discovered the investment, they asked Cummings to get the money back and return it to the firm.
Instead, Cummings reportedly altered account statements that made it appear as though his investment was performing better than what it was to hide the staggering losses. Cummings is also accused of creating a fake document to show that he attempted to return investors' money when he had not. In the end, Red Oak Capital could only recoup $761,522.90 of the initial investment.
During the firm's investigation into Cummings, it also found that the 61-year-old failed to repay a $1,350,000 debt. Instead of repaying the debt, officials say Cummings deposited the money into a bank account that he had control of.
"Mr. Cummings deliberately cheated investors out of hundreds of thousands of dollars for his personal gain," said U.S. Attorney Mark Totten in a news release. "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."
In addition to the prison sentence, Cummings must serve two years of supervised release and pay $5,755,477 in restitution.
The case was investigated by the FBI.
