Printer Ponzi Scheme

Date: February 11, 2010

Chicago, IL -- In a release issued by the Department of Justice (DOJ) on October 29, the Chicago office of the FBI apprehended a man, Matthew Scott in connection with a ponzi scheme he was running using his company called Gelsco. Allegedly, he lured 60 victims into combined investments of $28 million between the years 2000-2009. While he did not lose all of the money, it is reported that $4.5 million has been lost. The date of the arraignment has not been set at the time of the release.

According to the charges, Scott told his investors that their monies would be used to purchase or finance the purchase of printers worth over $100,000, and subsequently sold to third-parties. He is alleged to have told his investors of the printers that he had specific buyers and sellers of these printers when in fact his company did not purchase them. There has been a paper trail established of fraudulent purchase orders, promissory notes, invoices, and other documents he showed to the investors.

According the Scott, his company marked up the price of these printers by about 20 percent, and the profits from this markup (gained within 90 days) would in turn be split with the investors. To keep his scheme going, Scott had to continually raise money from the newer investors in order to repay the initial investors, which was not revealed to either crop. In May 2008, Scott managed to obtain a bank loan in the amount of $300,000 by falsely informing the bank that the loan would be secured through the sale of one of these “printers” that was being sold to third-party and then providing the bank with forged documents that backed up the lie.

If convicted, Scott faces up to 20 years in federal prison and $250,000 fine for committing mail fraud. The other option would be for the Court to impose a fine totaling twice the loss to any victim or twice the gain whichever represents the greater sum.