61-year-old Gifford Cummings, Jr., of Grand Rapids, known as “Chip,” pleaded guilty to executing a scheme to defraud while serving as President and CEO of Grand Rapids-based investment firm Red Oak Capital.
Cummings was sentenced to five and a half years in federal prison, followed by two years of supervised release, and ordered to pay more than $5.7 million dollars in restitution to victims of the fraud.
U. S. Attorneys say Cummings put $5 million of client money in an unauthorized investment in December 2019 which immediately began to lose hundreds of thousands of dollars in value.
When his business partners learned of the secret investment, they demanded he retrieve the money and return it to the firm.
Instead, Cummings submitted altered account statements to make it appear his unauthorized investment was performing better than it was to hide the mounting losses and created a fake document showing he sought the return of the investors’ money when he had not.
During the firm’s investigation, it was discovered Cummings also made it look as if he’d repaid a $1.3 million debt, when in truth, he had deposited that money into a bank account he controlled.
FBI investigators say the case involved wire fraud, unauthorized investments, and illegal access to computer networks, resulting in millions of dollars in losses.
