Alexandria, VA–Two Michigan men pleaded guilty for their roles in an advanced fee scheme involving phony Standby Letters of Credit supposedly issued by European banks.
According to court documents, Samuel John Abraham, 62, of Novi, and Kenneth Ross Thomas, 52, of Westland, conspired to defraud individuals and businesses desperate for credit by promising to arrange substantial lines of credit from European banks. In exchange for an up-front deposit of approximately $150,000 into an escrow account, Abraham, operating as Advanced Funding Group, using aliases such as “J. Samuel Ibrahim” and “Jamal S. Ibrahim,” and also posing as an attorney calling himself “John Wynn,” claimed that he could “lease” for clients a Standby Letter of Credit (SBLC) from a European Bank in the “face amount” of approximately $100 million. Of this large sum, clients were promised they could simply keep approximately $20 million as a “non-recourse loan.” A supposed “monetizer” would then use the remainder of the funds over the course of the year-long lease of the SBLC in order to engage in lucrative overseas trades (also known as “platform trading”), which would supposedly generate profits sufficient to repay the entire SBLC.
As part of the scheme, clients were directed to wire money to Escrow Agent Kenneth Thomas of “K. Thomas and Company Escrow Services.” In reality, the money was wired to the personal checking account of Kenneth Thomas, whose true profession was acting as Abraham’s chauffer and as a designer of cat towers. Thomas promptly provided most of the money to Abraham. According to the Superseding Indictment, Abraham then spent large sums of the money gambling at the Motor City Casino in Detroit, and on vehicles and a condominium. According to the Superseding Indictment, Abraham took in approximately $1million in proceeds from the fraud. Victims resided in Virginia, Arizona, Nevada, and other locations.
Standby Letters of Credit as marketed by the defendants do not exist and have long been the subject of public service announcements by the FBI and the Securities and Exchange Commission. Abraham has a prior federal conviction and also a permanent injunction entered against him by the SEC for operating the same scheme.
Thomas and Abraham pleaded guilty to conspiracy to commit wire fraud, and Abraham pleaded guilty to an additional count of wire fraud. Thomas and Abraham each face a maximum penalty of 20 years in prison when sentenced on October 4.