Investment Fraud Scheme

Felton Man Sentenced to 63 Months in Prison for Investment Fraud Scheme


Gary Ray Bassett Stole More Than $850,000, Including Money One Victim Intended to Use for Husband’s Cancer Treatment

April 20, 2010 - SAN JOSE—Gary Ray Bassett was sentenced today to 63 months in prison and ordered to pay $859,198.29 in restitution following his conviction on investment fraud related charges, United States Attorney Joseph P. Russoniello announced.

Bassett, 61, formerly of Felton, Calif., pleaded guilty on Feb. 8, 2010. He was originally charged in an indictment filed under seal in San Jose federal district court on Dec. 4, 2008, and unsealed on May 4, 2009. Bassett was charged with 10 counts of wire and mail fraud. Under the plea agreement, he pled guilty to two counts of wire fraud in violation of 18 U.S.C. § 1343.

Bassett admitted in the plea agreement that from approximately August 2004 through February 2006, he carried out a fraud scheme to obtain money from victims based on false promises that he would invest that money on their behalf. Instead, Bassett stole the money.

Bassett admitted that he raised more than $859,000 from more than 25 victims, but failed to invest any of that money as promised. He also admitted that he failed to provide the investors with the interest he had promised or to repay their principal. Instead, Bassett converted nearly $350,000 of the investors’ funds for his personal use and into cash.

Bassett further admitted in the plea agreement that he targeted victims he knew were vulnerable, including stealing $165,000 from a woman who needed the money to pay for stem cell treatment for her husband who was suffering from leukemia. Bassett gained the victim’s trust, in part, by telling her that he too was suffering from cancer. Bassett promised that if the victim invested with him, he would more than double her money so that she would be able to pay for her husband’s treatment. Instead, Bassett stole the money and never paid her anything.

Bassett also admitted that he fraudulently induced victims to invest with him by falsely claiming to be acting on behalf of charitable or educational organizations. He told victims that he had a history of investing in humanitarian projects, real estate, and hedge funds. Bassett defrauded one victim by convincing him that he would be investing in “products that would benefit all of mankind” such as alternative energy projects and low income housing. Bassett told other victims that investing with him would help them achieve their humanitarian goals such as helping underprivileged children or building a power plant at an Indian reservation. In reality, Bassett never actually invested any of the funds he received from victim-investors but instead always had intended to steal their money.

Bassett purported to “guarantee” his victims’ investment principal while providing them rates of return as high as 8 to 15 percent a month. Instead, Bassett spent all the money he received from victims on personal expenditures for himself, his friends, and on expenses that had nothing to do with any victim investments.

Bassett admitted in the plea agreement that the total loss from his investment fraud was more than $859,000.

Bassett was arrested on May 1, 2009, in Harlingen, Texas, pursuant to a sealed arrest warrant, and has since been held in custody as a flight risk. Bassett will begin serving his sentence immediately. The sentence was handed down by U.S. District Court Judge James Ware. Judge Ware also sentenced the defendant to a three-year period of supervised release.

Joseph Fazioli is the Assistant United States Attorney who prosecuted the case with the assistance of Legal Assistants Kamille Singh and Jeanne Carstensen. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the United States Postal Inspection Service.