PROVIDENCE, R.I. (WPRI) – The owner of a Johnston wholesale jewelry distributor is facing federal charges of wire fraud and identity theft.
According to the U.S. Attorney’s office, 51-year-old Gerald Kent of Groton, Connecticut “orchestrated a long running, multi-million dollar fraud scheme that defrauded a debtor finance company of more than $3.6 million.”
Prosecutors allege that Kent, who owns Kent Jewelry, took several steps to convince the Chicago-based finance company JD Factors – known as a factoring company – that it was receiving payments from Groupon and Zuliluy, two e-commerce websites.
Investigators explained the role of the factoring company as one in which a business sells its accounts receivable to the debtor finance company at a discount in order to get working capital without having to wait for payment. The factoring company pays the seller for the invoices and then collects the payment from the customer later – essentially, a cash advance for the seller, with a percentage taken, so that the seller can continue to operate without waiting for customers to pay right away.
Kent allegedly created fake invoices for Groupon and Zulily ordered that never happened, and then sent them to the finance company. He also allegedly created a fake version of the Groupon website and had co-conspirators pose as Groupon employees, and even opened bank accounts in the names of Groupon and Zulily so that the debtor finance company would think it was really dealing with those companies.
Investigators said Kent’s alleged scheme was “unusually sophisticated” and tricked JD Factors into paying Kent Jewelry for orders that didn’t actually exist. A person who answered the phone at JD Factors’ Chicago office said the company would not comment on the case.
Both Groupon and Zulily told investigators that they had worked with Kent Jewelry in the past, but Groupon terminated its relationship with Kent after several customer complaints. Zulily apparently continued to do business with Kent and was unaware of the fake invoices until investigators brought them to the company’s attention. JD Factors told Secret Service investigators that small payments coming from the fraudulent bank accounts convinced them that Groupon and Zulily were actually paying on real invoices.
In an affidavit, investigators said a person who was working as an information technology contractor for Kent came forward in February 2017 and alerted them to the scheme; he said Kent asked him to create the fraudulent websites and said he had discussed the fraudulent invoices with Kent on multiple occasions.
One of the emails from Gerald Kent provided to authorities by the cooperating witness said “fake invoices” in the subject line.
Kent was arrested by U.S. Marshals Wednesday at Foxwoods and was ordered held pending another hearing in federal court on July 26.
His defense attorney, Olin Thompson, declined to comment on the charges Thursday. A person at the address for Kent Jewelry did not want to speak to Eyewitness News, and a phone number registered to the company was no longer in service.