Wholesale Jewelry Distributor Pleads Guilty To Fraud: US Attorney

JOHNSTON, RI—A jewelry company owner with ties to Johnston has pleaded guilty to fraud, the U.S. Attorney's office said Wednesday. Gerald Kent, 52, of Groton, Conn., appeared in Providence federal court. He admitted he cheated another company out of more than $3.6 million while selling jewelry on the Internet.

Kent owns Kent Jewelry, which used to be located in Johnston. He used websites like Groupon.com and Zulily.com to see his merchandise, the U.S Attorney's office said. But he also created hundreds of fraudulent invoices which he sold to a debtor finance company in Chicago.

The scheme worked like this. The debtor finance company expected to buy his invoices at a discount in a business practice called factoring. (With factoring, a business owner like Kent would gain working capital, without having to wait for outstanding accounts to be paid up, while the debtor finance company would make money on the differential.) But in this case, Kent's invoices were worthless. Nonetheless, he submitted them and was paid. He also "created and used a fraudulent clone of Groupon, Inc.'s website, enlisted co-conspirators to pose as Groupon employees; and opened bank accounts in the names of Groupon and Zulily, Inc. in order to deceive the debtor finance company," the U.S. Attorney's office said.

Kent pleaded guilty to wire fraud and aggravated identity theft. He will be sentenced on March 9.

Image via Shutterstock