SJ Man Who Defrauded Elderly Investors In Fake Gold, Diamonds Scheme Sentenced To 9 Years
SAN JOSE (CBS SF) -- It was an offer too good to be true. Investors could earn up to ten times the amount invested in as short a time frame as one month. But when the dust settled, none of the 40 investors who together entrusted Fritz Kramer with more than $11 million received any return from their investment.
On March 19, 2019, after a six-week jury trial, Kramer, 72, was convicted on 11 counts of wire fraud and one count of commodities fraud. He was sentenced Tuesday by U.S. District Judge Edward J. Davila to nine years in prison and ordered to make restitution of $7,956,267.
According to government filings, beginning in 2008, Kramer solicited funds for an "investment opportunity" in a gold and diamond export project. Many of the investors solicited were elderly and a number lived in the Bay Area.
Kramer pitched the project as a "philanthropic endeavor" that would fund the direct export of gold and diamonds, cutting out "corrupt middle men." This would allow "poverty-stricken African miners (to) reap higher profits from their labor in the mines."
Kramer claimed to have control over several shipments of gold and diamonds, one of which he said was worth in excess of $100 million.
While the opportunity was sold as a "short-term investment," a fantastic set of financial problems emerged that supposedly delayed the exportation. Among them was the need to pay for multiple surgeries for an essential mining engineer, investor cash of $80,000 that was "incinerated in a car accident," bribes for corrupt officials, and a lawyer who seized $95,000 for unpaid legal fees.
All of the problems required more funds and Kramer kept going back to his investors to get them to put up more money to protect the money they had already invested.
Kramer showed investors fraudulent documents purporting to be from government agencies and private companies in Africa, the U.S. Attorney's Office said. One of the documents was a so-called "Kimberley certification," a document used in the diamond industry to prevent diamonds mined in a war zone from entering the mainstream diamond market.
The Kimberley certification was fake, a fact revealed, among other things, by the fact that the name Kimberley was misspelled as "Kimberly," prosecutors said.
The government's sentencing memorandum contained statements from a number of the defrauded investors. One, identified only as C.L., said, "He lied, he cheated, he manipulated us, he took our money, and even more important, he took our trust. I do not want him in the community where he can, number one, flee; and number two, again prey on elderly people and hurt them emotionally, physically, and financially."
"I'm a 76-year-old victim," stated an investor identified as James L., "and I lost more than a hundred thousand…"
Jacklyn L. summed it up by stating, "This … is a horror for me and a financial burden for the rest of my life."
In a lengthy excuse-filled apology letter sent to investors before his sentencing, Kramer stated "I was not good enough in my fight to do right and for the truth to win out: I failed. And I am paying for this failure in that I have lost everything that has been dear to me in my life: my family, my earthly belongings, my good reputation and all that I have worked for in my 45 years of work dedicated to assisting others."
In commenting on Kramer's letter, an investor identified as R.B. stated, "Fritz Kramer was once again trying to manipulate me and my emotions and what I might say at the upcoming hearing so that he might get a more lenient sentence. It feels like he is pleading his "woe is me" victim case yet once again. His anger at the circumstances is thinly veiled. It feels to me that he is speaking out of both sides of his mouth."
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