“She felt a sense of betrayal,” Attorney Johnny Loper describes how his client felt after learning she lost thousands of dollars in an investment scam.
“She mined her social network, she called her friends and acquaintances from all over. I know we saw a list that had to be 20, 30, 40 people long," said Loper.
“She” is Carolyn Grant; once a well-known politician in the Raleigh, North Carolina area and the former head of the local chamber of commerce. She was well connected.
Michael Carroll, US Postal Inspector, explained, “These investors were doctors, lawyers, businessmen, businesswomen, who often times were investing large sums of money with her because of the trust she had.”
Victims believed they were investing in a real estate development deal with a 20% return on their investment.
“That is an exceptionally high rate of return and honestly it was probably based mostly on her reputation. Her political connections and her reputation is, in my opinion, what really sold a lot of these investors," said Carroll.
Postal inspectors say another reason she was able to keep the money coming in was her use of so-called “lulling payments.”
“If you made a small investment up front, you would get your payment back or your interest on that payment which would then lend confidence that you open up your bank account a little further and offer more money to that investment in hopes of earning more dividends and interest," said Carroll.
Grant received more than $14 million dollars over 4 years. Her development deal was nothing more than a ponzi scam.
“Paying previous investors with current investor money and then she was converting the money to personal use as well – essentially using the none of the money for the purposes that were told to investors," said Carroll.
A warning from postal inspectors--an unrealistically high rate of return is often a red flag for a bad investment.
Carolyn Grant was convicted of mail fraud and sentenced to more than 6 years in federal prison. She was also ordered to pay 13 million dollars in restitution.
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