09-11-2003 -- Gwinnett, Angelica -- Indictment/Arrest -- News Release

Paramus Woman Indicted, Arrested for $2.5 Million Investment Scam

NEWARK - A Paramus woman who promised her investors large rates of return but instead diverted their money to her own use, was arrested today on charges that she defrauded those investors of nearly $2.5 million, U.S. Attorney Christopher J. Christie announced.

Angelica Gwinnett, 43, is charged in an Indictment with nine counts of wire fraud and one count of obstruction of justice, according to Assistant U.S. Attorney Alain Leibman. Gwinnett is scheduled to make an initial appearance today at 2 p.m. before U.S. Magistrate Judge Madeline Cox Arleo.

The Indictment was returned yesterday and unsealed with Gwinnett's arrest this morning at her home by Special Agents of the FBI.

The Indictment alleges that Gwinnett, an accountant, operated a business in 2001 and 2002 called U.S. Funding, with offices in Hackensack and elsewhere. Gwinnett alleged to potential investors that U.S. Funding was engaged in "factoring," whereby the company would for a fee collect monies due to other businesses from their customers for services provided or goods sold. Through telemarketers, Gwinnett allegedly sought persons to invest in U.S. Funding, purportedly so that the company could acquire additional accounts receivable to factor.

The Indictment alleges that in promotional materials and in Gwinnett's meetings and discussions with potential investors, there were numerous misrepresentations, including the following:

• the materials falsely claimed that U.S. Funding had been providing factoring services to New York and New Jersey companies since 1998;

• the materials promised investors a return on their investment of 20-25 percent per year;

• the materials failed to disclose that Gwinnett was paying a substantial percentage of the money raised from investors in fees to the telemarketers, greatly diminishing the amount of money left for investment in U.S. Funding;

• the materials failed to disclose that Gwinnett was diverting a large part of the money remaining after telemarketing fees to support her lifestyle and to fund her investments in other businesses; and

• the included financial statements, dated as of Sept. 30, 2001, substantially overstated the amount of accounts receivable held by U.S. Funding, the company's assets, and its net income, among other items.

Rather than use investors' funds to increase the business of U.S. Funding, the Indictment alleges that Gwinnett misapplied investors' money, spending $600,000 to pay telemarketer fees and paying herself, through salary and distributions, more than $400,000, in part to fund her gambling activities in Atlantic City. Moreover, the Indictment alleges, Gwinnett invested additional monies in other businesses owned by herself and family members.

Each of the wire fraud and obstruction counts carries a maximum penalty of five years in prison and maximum fine of $250,000.

Under U.S. Sentencing Guidelines, the U.S. District Judge to whom the case is assigned would, upon a conviction, determine the actual sentence based upon a formula that takes into account the severity and characteristics of the offense, as well as each defendant's criminal history, if any. Parole has been abolished in the federal system. Under Sentencing Guidelines, defendants who are given custodial terms must serve nearly all that time.

An Indictment is a formal charge made by a grand jury, a body of 16 to 23 citizens. Grand jury proceedings are secret, and neither persons under investigation nor their attorneys have the right to be present. A grand jury may vote an Indictment if 12 or more jurors find probable cause to believe that the defendant has committed the crime or crimes charged.

Despite Indictment, every defendant is presumed innocent, unless and until found guilty beyond a reasonable doubt following a trial at which the defendant has all of the trial rights guaranteed by the U.S. Constitution and federal law.

Christie credited Special Agents of the FBI, under the direction of Special Agent in Charge Louise F. Allen, with bringing the case.

The Government is represented by Assistant U.S. Attorney Leibman of the U.S. Attorney's Government Fraud Unit.

Defense Counsel: Chester Keller, Esq., Newark