RALEIGH, Nc. (WITI) — A woman who was a pillar in her community and trusted by everyone who knew her managed to pull off a $14 million Ponzi scheme.
"She felt a sense of betrayal," explained the attorney of one of the fraud victims, Johnny Loper.
Loper's client lost thousands of dollars in an investment scam run by Carolyn Grant.
"She mined her social network, she called her friends and acquaintances from all over. I know we saw a list that had to be 20, 30, 40 people long," Loper said about Grant.
Grant was once a well-known politician in the area of Raleigh, North Carolina and the former head of the Chamber of Commerce.
She was well-connected.
"These investors were doctors, lawyers, businessmen, businesswomen — who often times were investing large sums of money with her because of the trust she had," said U.S. Postal Inspector Michael Carroll.
Victims thought they were investing in a real estate development deal with a 20% return on their investment.
"'That is an exceptionally high rate of return. And, honestly, it was probably based mostly on her reputation. Her political connections and her reputation is, in my opinion, what really sold a lot of these investors," Carroll noted.
According to postal inspectors, another reason Grant was able to keep money coming in was the use of her so-called "lulling payments."
"If you made a small investment up front — you would get your payment back or your interest on that payment which would then lend confidence that you open up your bank account a little further and offer more money to that investment in hopes of earning more dividends and interest," Carroll explained.
Grant received more than $14 million dollars over 4 years. Her development deal was nothing more than a Ponzi scam.
"Paying previous investors with current investor money and, then, she was converting the money to personal use as well — essentially using the none of the money for the purposes that were told to investors," Carroll said.
As good as it sounds, an unrealistically high rate of return is often a red flag for a bad investment.
Carolyn Grant was convicted of mail fraud and sentenced to more than 6 years in federal prison. In addition, she was ordered to pay $13 million in restitution.