Gifford "Chip" Cummings, Jr., the former CEO of a Grand Rapids investment firm, has been sentenced to 66 months in federal prison. He was also ordered to pay $5,755,477 in restitution to victims for defrauding investor clients at Red Oak Capital. This announcement was made by U.S. Attorney Mark Totten for the Western District of Michigan.
"Mr. Cummings deliberately cheated investors out of hundreds of thousands of dollars for his personal gain," said U.S. Attorney Mark Totten. "Financial fraud is a serious problem, and my office will not hesitate to prosecute fraudsters whose schemes inflict devastating financial harm on legit businesses and honest investors."
Cummings pleaded guilty to executing a fraudulent scheme while serving as President and CEO of the investment firm in Grand Rapids, Michigan. In December 2019, he invested $5 million of client money without authorization, leading to significant losses. When his business partners discovered this unauthorized investment, they demanded that he retrieve the funds.
Instead of complying, Cummings altered account statements to conceal the losses and created a fake document suggesting he had attempted to recover the investors' money when he had not done so. The firm managed to recover only $761,522.90 from its initial investment. Additionally, it was revealed during an investigation that Cummings failed to repay a $1,350,000 debt and misrepresented this repayment by depositing the funds into an account he controlled.
"Today's sentencing of Gifford (Chip) Cummings highlights the FBI's unwavering commitment to addressing both financial and cybercrimes," stated Cheyvoryea Gibson, Special Agent in Charge of the FBI in Michigan. "This case involved wire fraud, unauthorized investments, and illegal access to computer networks resulting in millions of dollars in losses."
The investigation was conducted by the Federal Bureau of Investigation with Assistant U.S. Attorneys Davin Reust and Chris O’Connor prosecuting the case.