Ex-CEO of Michigan investment firm sentenced for defrauding clients in $5M scheme

(CBS DETROIT) For cheating investors out of $5 million, the former CEO of an investment firm based in Grand Rapids received a sentence of five and a half years in prison.

Grand Rapids resident Gifford “Chip” Cummings, Jr., 61, entered a guilty plea to carrying out a scheme to deceive customers while holding the positions of CEO and president at Red Oak Capital.

According to officials, Cummings invested $5 million of his clients’ money in an unapproved venture in December 2019 that instantly lost hundreds of thousands of dollars in value. Upon learning about the investment, Cummings’ business partners requested that he return the funds to the company.

To conceal the enormous losses, Cummings allegedly falsified account statements to give the impression that his investment was doing better than it actually was. Additionally, Cummings is charged with fabricating a document to demonstrate that he tried to reimburse investors’ money when in fact he had not. Red Oak Capital was only able to recover $761,522.90 of the original investment in the end.

While investigating Cummings, the firm also discovered that the 61-year-old had not paid back a $1,350,000 loan. Officials claim that Cummings transferred the funds into a bank account under his control rather than paying back the obligation.

In a press statement, U.S. Attorney Mark Totten stated, “Mr. Cummings purposefully defrauded investors of hundreds of thousands of dollars for his own benefit.””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 is also required to pay $5,755,477 in restitution and serve two years of supervised release in addition to the prison term.

The FBI looked into the matter.

Joe Buczek works for CBS Detroit as the manager of digital content and promotion. The Leader and the Kalkaskian, the Oakland Press, the Morning Sun, the Grand Traverse Insider, and WWTV were among his prior employers.

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