A 32-year-old Hilo man was arraigned Friday in U.S. District Court in Honolulu for allegedly scamming investors of more than $1 million since 2006 in an “advance fee” scheme.
Justin Wade Smith pleaded not guilty to 39 counts of wire fraud. U.S. Magistrate Judge Richard Puglisi ordered Smith to appear for trial Oct. 29 before U.S. District Judge J. Michael Seabright, and set a detention hearing, which will decide if Smith is to be released on bail, for Tuesday.
“Victim complaints came in. That’s how we found out,” FBI Special Agent Tom Simon said Friday. Simon declined to say how long the investigation, which was conducted by the Honolulu FBI office and the IRS Criminal Investigative Division, took.
Smith was indicted Wednesday by a federal grand jury in Honolulu. He was arrested by FBI agents and local police late Thursday morning at the corner of Kanoelehua Avenue and Puainako Street in Hilo.
“The arrest was without incident,” Simon said.
According to the indictment, Smith falsely claimed to be an heir to a trust fund but needed money from others to access his inheritance. He allegedly promised sizable investment returns to those who helped him by providing money for purported fees. The indictment alleges that he was not a trust fund heir and the money he received was not used to access his inheritance.
The document further alleges that Smith falsely claimed to represent a federal law enforcement agency seeking money from investors to fund law enforcement operations. He allegedly promised investors returns that would be derived from law enforcement seizures. The indictment alleges that Smith does not, in fact, represent any law enforcement agency and the money he accepted was not used for law enforcement purposes.
The indictment states that the funds Smith allegedly bilked from victims were received “in cash, through the loading of Smith’s Green Dot prepaid debit card, or via Western Union or Moneygram wire transfers.”
Asked if Smith was running a pyramid or Ponzi scheme, Simon replied: “The indictment doesn’t mention any reimbursement to investors, and so it’s difficult for me to tell how the financial analysis is going to play out. But the indictment is very clear that over $1 million went from these investors into his pocket.”
For each of the 39 wire fraud counts, Smith faces a maximum period of imprisonment of 20 years and a fine of up to $250,000, if convicted.
The FBI is seeking the public’s help in identifying other potential victims who haven’t come forward. To date, more than 30 alleged victims have come forward on Oahu, Hawaii Island, Maui and in Las Vegas. Investigators suspect there are other alleged victims who have not yet been identified since many of the investments apparently took place using cash, Simon said.
If anyone believes they’ve been victimized by Smith or has information to provide regarding these allegations, they should contact the FBI’s Kona office at 329-5106, Simon said.
Email John Burnett at firstname.lastname@example.org.