Three North Carolina men have been charged and sentenced in connection with the Black Diamond Ponzi Scheme.

These men were part of a group charged with operating a $40 million Ponzi scheme.  They claimed they were operating a legitimate hedge fund called Black Diamond when in fact they were not.

A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation. A hedge fund is an investment fund that can undertake a wider range of investment and trading activities than other funds, but which is only open for investment from particular types of investors specified by regulators.

The group sought money from investors who were often elderly and retired using false and fraudulent claims.

Jeffrey M. Muyres, 36, of Matthews, NC pled guilty on December 7, 2010, to conspiracy to commit securities fraud and money laundering conspiracy.  Muyres was sentenced to 23 months in prison.

Bryan Keith Coats, 51, of Clayton, NC pled guilty on October 24, 2011, to conspiracy to commit securities fraud and money launering conspiracy.  Coat has not been sentenced yet.

Roy E. Scarboro, 47, of Archdale, NC pled guity on December 3, 2010, to securities fraud, money laundering, and making false statements to the FBI.  Scarboro was sentenced to 26 months prison.