Giving fraud a bad name: The Ponzi scheme
A Fort Mill man was sentenced to over three years in prison Monday for bilking investors out of more than $1.6 million in a Ponzi scheme.
Nickolas M. Godfrey, 41, pleaded guilty to wire fraud, securities fraud and money laundering in federal court in North Carolina. He received 37 months in federal prison and has to pay $.1.6 million in restitution after more than 20 victims were scammed.
A federal judge said the case was “serious, serious fraud.”
For years starting in 2012, Godfrey told investors he ran a short-term cash advance business that assisted businesses. There was no such company, federal prosecutors said.
Godfrey used the money he received to pay investors and kept some of it for himself, prosecutors said.
Godfrey used to own and run Bliss salon in Pineville, N.C., near the South Carolina state line, federal prosecutors said. He also had another salon, Alter Ego, in the Ballantyne area, documents show.
Some of the victims were Godfrey’s friends, WSOC-TV reported.
Godfrey created a phony company and also evaded paying taxes at the hair salons by not paying tax withholdings for his employees, officials say.
A Ponzi scheme is an investment fraud that pays existing investors with money collected from new investors, according to the federal government. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk, but instead, use it to pay those who invested earlier and may keep some for themselves, officials say. Ponzi schemes are named after Charles Ponzi, who duped investors in the 1920s with a postage stamp speculation scheme.