James "Jim" Paul Lewis Jr. operated one of the largest and longest running

Ponzi scheme A Ponzi scheme (, ) is a form of fraud that lures investors and pays Profit (accounting), profits to earlier investors with Funding, funds from more recent investors. Named after Italians, Italian confidence artist Charles Ponzi, this type of s ...

s in

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

history. Over approx. 20 years, Lewis collected around $311 million U.S. dollars from investors. He operated under the name of Financial Advisory Consultants in Lake Forest,

Calif. California () is a state in the Western United States that lies on the Pacific Coast. It borders Oregon to the north, Nevada and Arizona to the east, and shares an international border with the Mexican state of Baja California to the south ...

, and promised high returns. Lewis said that he was investing the money, and he even made dividend and withdrawal payments so that the

scam A scam, or a confidence trick, is an attempt to defraud a person or group after first gaining their Trust (emotion), trust. Confidence tricks exploit victims using a combination of the victim's credulity, naivety, compassion, vanity, confidence ...

could continue, but was instead using it to finance his own high lifestyle of fancy cars, big homes, and girlfriends. The ploy Lewis was running was a classic "

"; in this scheme, new investors contribute funds that get redistributed to earlier investors (including Lewis himself). As long as new investors keep contributing, earlier ones keep getting a return on their investment and the

fraud In law, fraud is intent (law), intentional deception to deprive a victim of a legal right or to gain from a victim unlawfully or unfairly. Fraud can violate Civil law (common law), civil law (e.g., a fraud victim may sue the fraud perpetrato ...

continues. But eventually, new investors stop contributing and the whole pyramid collapses, with the later contributors getting nothing in return for their investment. As is the case with many Ponzi schemes, Lewis relied on trust and word of mouth to help build his scheme. Many of Lewis' victims were members of churches and church-related groups, of which Lewis was reportedly a member. In 2003, investors became suspicious when Lewis stopped paying dividends. He claimed that the Dept. of Homeland Security had frozen the funds, and this bought him some time, but eventually the

FBI The Federal Bureau of Investigation (FBI) is the domestic Intelligence agency, intelligence and Security agency, security service of the United States and Federal law enforcement in the United States, its principal federal law enforcement ag ...

was after him. After a manhunt, Jim Lewis was arrested in

Houston Houston ( ) is the List of cities in Texas by population, most populous city in the U.S. state of Texas and in the Southern United States. Located in Southeast Texas near Galveston Bay and the Gulf of Mexico, it is the county seat, seat of ...

Texas Texas ( , ; or ) is the most populous U.S. state, state in the South Central United States, South Central region of the United States. It borders Louisiana to the east, Arkansas to the northeast, Oklahoma to the north, New Mexico to the we ...

in 2004. He was brought back to California, and in 2006 was convicted and sentenced to 30 years in prison by a federal judge. Lewis was 60 years old. U.S. District Judge

Cormac Carney Cormac Joseph Carney (born May 6, 1959) is an inactive senior United States district judge of the United States District Court for the Central District of California. Early life and education Carney was born in Detroit, Michigan to Irish immigr ...

also ordered him to pay $156 million in restitution. In imposing the statutory maximum of 30 years, Judge Carney described the scheme as a "crime against humanity" because of the harm to many elderly victims, some of whom now face a bleak future in the final years of their lives because of their having been made destitute at the hands of Mr. Lewis. The court appointed receiver, Robb Evans, has since recovered only $11 million. Lewis has since filed an appeal but to no avail.

References

{{DEFAULTSORT:Lewis, James Paul American fraudsters Pyramid and Ponzi schemes