WEST PALM BEACH, Fla. -- A 25-year old man ran an audacious $10 million investment fraud out of Boca Raton, using the money to finance his jet-set, lavish lifestyle and gamble big at Las Vegas casinos, according to federal court documents.
Donald R. French Jr. launched what the FBI has described as "a classic Ponzi scheme" when he was just 21 years old, allegedly convincing clients he could get them returns as high as 50 percent by investing in such things as emeralds. He spent the past five years living in Rome, visiting about 30 countries and gambling away at least $565,000, records show.
His jaunts around the world ended this summer when he was detained in South Africa and shipped back to Las Vegas to face charges he passed $750,000 in bad checks at casinos, court records show. After he pleaded guilty to a felony charge there, federal authorities took him into custody. He arrived in South Florida in handcuffs last week to face a wire fraud charge that could carry up to 20 years in prison.
French, wearing a blue jail jumpsuit, was ordered held without bond Thursday while he awaits trial. Besides his extensive travels, French had obtained permanent resident status in Rome where he lived with his fiance and their 3-year-old daughter, wrote U.S. Magistrate Judge Dave Lee Brannon.
French has freely admitted to duping investors who entrusted their money with him and his purported hedge fund, D3 Capital Management LLC, court records show.
When an FBI agent sat down with him in July, French came clean that he invested only a small percentage of the millions he solicited from about 20 clients, according to court documents.
"French said he was able to induce investors to invest because of his ability to lie and manipulate people through his 'gift of gab,' " wrote FBI Special Agent Daniel Szczepanski.
French had dabbled in acting with his resume on an Italian casting agency website comparing the Michigan native's All-American looks to Brad Pitt. He lists residences in Boca Raton and Rome with his one screen credit coming in a 2007 Italian movie "Matrimonio alle Bahamas."
French incorporated the hedge fund in March 2008 with his last office address in the heart of the upscale Mizner Park shopping area in Boca Raton. D3 Capital Management had billed itself as "a premier provider of global investment management" with clients around the world and offices in Hong Kong and Rome.
The hedge fund's website offered investors a chance to access their portfolios to check out their robust investments in foreign currencies, emeralds and a solar-energy project in Italy, court records show.
It turns out that the office in Mizner Park with nothing more than a phone number and mailing address. The investors' portfolios were mirages with French and co-conspirators cooking up the numbers, court records show.
Investors' money flowed into French's pockets with him racking up $1.48 million in debit card purchases, withdrawing $1.28 million in cash and paying $62,000 to drive high-end vehicles, records show.
French convinced one investor to entrust nearly $2 million with him, Szczepanski wrote. He had promised her she would earn an annual return of 50 percent, records show.
She initially invested $954,000, but French came to her in February 2011 to tell her that the money had become tied up and she needed to put in an additional $1 million to get it out, records show. French allegedly accompanied her to a bank in Boston as she made the $1 million transfer to an account in Broward County.
When questioned by the FBI agent, French admitted he used the investor's money to pay a $450,000 gambling debt at The Cosmopolitan of Las Vegas casino, records show.
Records from his Las Vegas criminal case show that from April 2011 to June 2011, French was back at The Cosmopolitan, passing about $600,000 in bad checks there.
In the deal he cut with prosecutors in Nevada, he pleaded guilty in August to passing a bad check, agreeing to a prison sentence of no more than 30 months behind bars.
The money now appears to have run out for French, court records indicate. He is being represented by the Federal Public Defender's Office and has reported he has no money and doesn't own any property or vehicles.
French is set to be arraigned Nov. 2 in West Palm Beach federal court.
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