Kentucky Prosecutors: Alleged scammer took $1.4 million Many of the investors were elderly, some invested their life savings

By Brett Barrouquere

Associated Press

LOUISVILLE, Ky. (AP) -- Kevin Canizaro thought it sounded like a good deal -- 4.1 percent interest on a certificate of deposit and visits from a sales representative of G3 Capital Management LLC.

Canizaro, who works in the oil and gas industry in Houston, sent along $250,000 to Cory B. George, who ran G3 Capital Management. Canizaro now figures he may never see the money again.

"If I had done my diligence beforehand, I would have known," Canizaro told The Associated Press in a phone interview.

What Canizaro and more than 20 mostly elderly investors didn't know, federal prosecutors say, is that George is man with a long history of arrests and misdemeanor and felony convictions stemming from fraud-related scams in Kentucky, Indiana and Nevada.

A federal grand jury in Kentucky indicted George, 27, in August on charges of mail fraud and wire fraud. George is now in federal custody in Kentucky. George has pleaded not guilty and had been set for trial Oct. 18 in Owensboro, but prosecutors want to delay the proceedings while they line up 23 witnesses from Kentucky, Texas and Florida to fraud schemes they allege George ran over the years.

The charges against George stem from his alleged actions with three people, including Canizaro. But, prosecutors estimate that a total of 23 investors gave George about $1.4 million in amounts ranging from $10,000 to $250,000. Court papers filed this week mark the first time prosecutors have given an estimate of the scope of George's alleged fraud.

"Many of these victims are elderly, and some invested their life savings with the defendant believing they were investing in a guaranteed and insured certificate of deposit," Assistant U.S. Attorney Marisa Ford wrote in a motion filed Tuesday to include the evidence at trial.

His attorney, Benjamin Early of Lewisport, Ky., did not immediately return a call seeking comment Wednesday.

George also has legal troubles in Florida. Flora N. Beal, a spokeswoman for the Florida Office of Financial Regulation, confirmed that the agency has an open investigation involving George, but declined to give details.

According to an affidavit filed by FBI Special Agent David McClelland, George opened G3 Capital Management in Owensboro on Dec. 16, 2009, which wasn't a bank and not authorized to issue certificates of deposit. Around the same time, McClelland wrote, George opened two checking accounts in G3 Capital's name at The Peoples Bank in Marion, Ky. George also opened a brokerage account at Options Express and a checking account with JP Morgan Chase Bank, also in the name of G3 Capital.

In the ensuing months, McClelland wrote, George deposited funds into G3 Capital's accounts at JP Morgan Chase Bank and The People's Bank, with each deposit being in the form of a third-party check written from someone in Florida, Texas and Kentucky.

Some of the checks noted in the memo line that they were for certificates of deposit.

"Much of the money deposited into these accounts was used by George for personal expenses such as shopping, traveling and gambling," McClelland wrote.

Canizaro said he wasn't aware of what George was doing with the funds and wasn't suspicious until May, when the representative of G3 Capital stopped returning his calls.

"They stonewalled me," Canizaro said.

While the FBI said George was spending investors' funds, public records show George gave $250 to Trey Grayson's U.S. Senate campaign in March 2010 and joined the Greater Owensboro Chamber of Commerce.

By 2011, George sought more customers for his certificates of deposit. George set up an office in Palm Beach, Fla., and began advertising certificates of deposit paying 4.1 percent interest -- more than twice the rate available at the time -- in Florida and the Houston area. McClelland said George would meet with investors or speak to them by phone, then send along a document that supposedly guaranteed the investment.

McClelland said that an analysis "shows that all investments George has made with investor funds have been made in the commodity market, which is historically very risky." George lost $550,000 between March 2010 and February, McClelland said. George also tried to buy a house in the name of G3 Capital in April, shortly after receiving a $250,000 check from an investor, McClelland said.

Bank and brokerage accounts for G3 Capital Management were seized by federal agents on April 27 of this year. The FBI contacted George on April 28, but George declined to discuss the complaint. George then fled Owensboro, leaving his cellphone behind, McClelland said.

The FBI caught George in Las Vegas in early August. During an initial appearance in federal court, U.S. Magistrate Judge Lawrence Leavitt ordered George held pending his transfer to Kentucky. Leavitt found that George had been "laying low," using false identifications and traveling a lot since the FBI seized his accounts.

Canizaro and other investors are now left trying to recover their investments.

"I'd like my money back," Canizaro said.

Published: Fri, Oct 14, 2011