Crime & Safety
Johnston Jewelry Company Owner Charged in Multi-Million Dollar Fraud Scheme
Gerald Kent is accused of participating in a fraud scheme, the U.S. Attorney's office said Thursday.
JOHNSTON, RI — Kent Jewelry in Johnston did most of its sales over the Internet on websites like Groupon and Zulilly, according to the U.S. Attorney's Office. On Thursday, the jewelry business owner, Gerald Kent, 51, of Groton, Connecticut, appeared in Providence federal court where he was accused of masterminding a "long running, multi-million dollar fraud scheme that defrauded a debtor finance company of more than $3.6 million dollars." Kent is now in federal custody pending a July 26 hearing. He is charged with wire fraud and aggravated identity theft.
According to court papers, Kent allegedly submitted fraudulent invoices to a factoring (debtor finance) company based in Chicago, Ill., mostly from Groupon and Zulily. Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. Factoring companies work with businesses to provide working capital in order to grow their businesses without having to wait for outstanding accounts receivables to be paid. Kent received nearly $5 million dollars for the phony invoices. He allegedly created hundreds of invoices.
To execute the fraud scheme, Kent allegedly also created and used a fraudulent clone of Groupon, Inc.’s website; enlisted co-conspirators to pose as Groupon employees; and opened bank accounts in the names of Groupon and Zulily, Inc., in order to deceive the debtor finance company into believing it was receiving payments from these companies.
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He was arrested on Wednesday evening at Foxwoods.
A criminal complaint is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
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The case is being prosecuted by Assistant U.S. Attorneys Lee H. Vilker and John P. McAdams.
The matter was investigated by agents from the U.S. Secret Service and the FBI.
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