Penfield man pleads guilty to bilking investors out of hundreds of thousands of dollars

 

Date: December 9, 2020

Contact: newsroom@ci.irs.gov

Buffalo, N.Y. - Brian L. Schumacher of Penfield, NY, pleaded guilty before Senior U.S. District Judge William M. Skretny to conspiracy to commit wire fraud. The charge carries a maximum penalty of 20 years in prison and a fine of $250,000.

According to a previously-filed criminal complaint and the defendant's plea agreement, between April and December of 2016, the defendant conspired with others to defraud two investors out of hundreds of thousands of dollars. The actions of Schumacher and others led investors, located in Massachusetts and California, to wire significant amounts of funding to Schumacher's company, Integra Diamonds, located in Rochester, NY, to enable Integra Diamonds to purchase diamonds in Africa.

The Massachusetts victim (Victim 1) was contacted by a co-conspirator of the defendant, who initially indicated that an investment of $100,000.00 would yield a minimum profit of $60,000.00 in one year. Skeptical because of the generous return that was promised, Victim 1 sought assurances that he was not the initial or sole investor in Integra Diamonds. Subsequently, Victim 1 received documents that falsely suggested that Integra Diamonds had other investors, and which also falsely claimed that Integra Diamonds had agreements with a logistics vendor and U.S.-based diamond purchasers. On June 16, 2016, Victim 1 wire transferred $100,000.00 from his bank account to an account in the name of Integra Diamonds. During the course of the conspiracy, $30,000 was returned to Victim 1, but not the remaining $70,000 of his initial investment nor any of the promised return. $44,000 of Victim 1's funds were attempted to be wired to Schumacher while he was in Sierra Leone to purchase diamonds. When that wire was unsuccessful, $44,500 was returned to a co-conspirator's personal bank account.

Victim 2, a resident of California, also invested $100,000.00 in Integra Diamonds, after receiving a promise for a significant return. On December 2, 2016, Victim 2 wire transferred $100,000.00 from his bank account to an Integra Diamonds bank account. Schumacher then withdrew $90,000 in cash from Victim 2's investment, which he spent on expenses associated with another trip to Sierra Leone to purchase diamonds. Schumacher used Victim 2's money to purchase, among other things, 1,211.85 carats of industrial diamonds for $30,296.25. Schumacher then resold those diamonds to a U.S. diamond broker for $11,514, none of which was returned to Victim 2. Over the course of the next year, Victim 2 made multiple requests for status updates and for return of his fund. Schumacher provided a number of excuses for the failure of Victim 2's investment, including that the diamond purchase was simply taking longer than expected and that the original diamond purchase fell through. Victim 2 was also informed that Schumacher was trying to secure another deal. Ultimately, Integra Diamonds did not repay Victim 2 any portion of the $100,000 loan principle, or any interest.

The plea is the result of an investigation by the Internal Revenue Service, Criminal Investigations Division, under the direction of Jonathan D. Larsen, Special Agent-in-Charge and the U.S. Postal Inspection Service, under the direction of Boston Division Inspector-in-Charge Joseph W. Cronin.

Sentencing is scheduled for March 24, 2021, before Judge Skretny.