CEO of Limited Liability Company Pleads Guilty to Wire Fraud

CAMDEN, N.J. – The chief executive officer of a private equity investment firm today admitted he defrauded an investor of $1.35 million dollars, U.S. Attorney Craig Carpenito announced.

Karl James, 48, pleaded guilty before U.S. District Judge Joseph H. Rodriguez in Camden federal court to an information that charged him with one count of wire fraud.

According to documents filed in this case and statements made in court:

James was the CEO of Gore Capital LLC, which he told others was a private equity investment firm. In February 2016, James and the victim agreed to each invest approximately $1.5 million into a company that specialized in extracting and converting cannabinoids from marijuana. They further agreed to form an LCC as a conduit for their joint investment. In April 2016, James incorporated the LLC in Delaware.

On April 20, 2016, James instructed the victim to wire his investment funds into a bank account. James falsely told the victim that the victim also had access to the account. On April 22, 2016, the victim wired $500,000 into the account. On July 12, 2016, James instructed the victim to wire the remaining $1 million of his investment, which the victim did. To induce the victim’s payment, James told the victim that he would deposit his own money into the account. In reality, James never wired or deposited any of his own funds.

James later spent $1.35 million of the victim’s funds on personal and entertainment expenses for himself.

The wire fraud charge carries a maximum penalty of 20 years in prison and a fine of $250,000. Sentencing is scheduled for Jan. 6, 2020.

U.S. Attorney Craig Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Matthew Feldman Nikic and Assistant U.S. Attorney Dara Govan, Chief of the Office’s Public Protection Unit, in Newark.