Freehold Man, 3 Others Charged In $800K Fraud Scheme: U.S. Attorney

NEWARK, NJ — A Freehold man is one of four men charged in a scheme that authorities say defrauded two people out of about $800,000, Acting U.S. Attorney William E. Fitzpatrick announced.

Jerrid Douglas, 43, of Freehold, was arrested Wednesday, along with Harold Mignott, 54, of Voorhees, and James Adkins, 64, of Hillside, according to Fitzpatrick's office. Roy Johannes Gillar, 44, of Las Vegas, was arrested Tuesday, the news release said. All four are charged with one count of conspiracy to commit wire fraud, authorities said.

The four were charged in a scheme that targeted an unnamed company; from March 2016 through June 2016, the four sought to defraud the company out of $1 million, authorities said.

As part of the scheme, Douglas and the others induced two people who ran the targeted company to enter a joint-venture agreement with a New Jersey-based shell company set up by Douglas, Mignott, Adkins and Gillar, authorities said. In the fraudulent joint venture, the four men told the victims their company could acquire and provide the targeted company with a “standby letter of credit” backed by Mexican gold bonds, authorities said. A standby letter of credit is a guarantee of payment issued by a bank on behalf of a client that is used should the client fail to fulfill a contractual commitment with a third party.

The targeted company wanted access to the standby letter of credit so it could purchase raw gold overseas and sell it to gold refineries. As part of the joint-venture agreement, the targeted company agreed to pay Douglas and the others $1 million for the bank fee associated with the standby letter of credit, authorities said.

In order to cover up the scheme and convince the victims to approve transfer of the funds, the defendants made numerous verbal and written misrepresentations, including providing the victims with a phony letter from a major international bank saying that it was ready, willing, and able to provide a €1 billion standby letter of credit to the defendants’ shell company, authorities said.

However, after the targeted company transferred $800,000 of the $1 million to the defendants, but the defendants failed to provide the targeted company with a standby letter of credit or anything of value, authorities said. Instead, the four men used the money to buy luxury cars and expensive watches, to make mortgage payments on their personal residence and large cash withdrawals, Fitzpatrick's office said.

"At no time since March 2016 have the defendants or any company owned or operated by them provided anything of value to Victim Company A in exchange for Victim Company A’s $800,000. The defendants also have not returned any of the money to Victim Company A," Fitzpatrick's office said.

The conspiracy to commit wire fraud charge carries a maximum potential penalty of 20 years in prison and a $250,000 fine.

Douglas, Mignott, and Adkins, made their initial court appearances Wednesday before U.S. Magistrate Judge Michael A. Hammer in Newark federal court. Gillar appeared before U.S. Magistrate Judge Nancy J. Koppe in Las Vegas federal court. Gillar was detained. Mignott, Adkins, and Douglas were released on $200,000 unsecured bonds, Fitzpatrick's office said.

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