Gifford “Chip” Cummings, Jr., ex-CEO of Red Oak Capital, faces 66 months in federal prison, two years of supervised release, and $5.75 million in restitution.
Unauthorized Investments and Deceptive Practices
Gifford “Chip” Cummings, Jr., 61, of Grand Rapids, Michigan, was sentenced to 66 months in federal prison on charges of wire fraud. As the former President and CEO of Red Oak Capital, Cummings orchestrated a scheme to defraud investors, resulting in millions of dollars in losses. In addition to his prison term, he has been ordered to repay $5,755,477 in restitution to his victims and will serve two years of supervised release following his incarceration.
According to the U.S. Attorney’s Office for the Western District of Michigan, Cummings secretly invested $5 million of client funds into an unauthorized venture in December 2019. The investment rapidly lost value, leading to hundreds of thousands of dollars in losses. When confronted by his business partners, Cummings falsified account statements to hide the financial damage. He also fabricated documents to create the illusion that he had attempted to recover the funds.
Despite these deceptive efforts, Red Oak Capital was able to recover only $761,522 of the initial investment. An internal investigation revealed additional misconduct: Cummings failed to repay a $1.35 million debt, instead depositing the funds into a bank account he personally controlled while falsifying records to make it appear the debt was resolved.
FBI Investigation Uncovers Widespread Fraud
The case was investigated by the Federal Bureau of Investigation’s (FBI) Detroit Field Office Cyber Task Force and the Grand Rapids Resident Agency. Cummings’ actions included unauthorized investments, wire fraud, and illegal access to computer networks, resulting in substantial financial harm to investors.
“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 legitimate businesses and honest investors.”
Special Agent in Charge Cheyvoryea Gibson underscored the FBI’s commitment to pursuing justice in cases involving financial crimes. “This case highlights the FBI’s unwavering commitment to addressing financial and cybercrimes, especially those perpetrated by individuals in positions of trust,” Gibson said. “The investigation was crucial in securing a successful prosecution and safeguarding Michigan communities from those who exploit their trusted positions.”
A Devastating Impact on Investors
The sentencing marks the culmination of a long investigation into Cummings’ fraudulent activities, which inflicted significant financial harm on Red Oak Capital and its clients. Cummings’ actions betrayed the trust of investors and partners, causing irreparable damage to the firm’s reputation and finances.
Assistant U.S. Attorneys Davin Reust and Chris O’Connor led the prosecution, securing a conviction that reinforces the consequences of financial misconduct.
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